If you work within the construction industry, it’s important to know about the Construction Industry Scheme (CIS).
What is CIS?
Simply put, it’s a tax deduction scheme, which involves tax being deducted at source from payments relating to construction work, usually applied to contractors.
What work is covered by CIS?
According to government guidelines, CIS covers the following types of construction work:
- Site preparation, such as providing access works and laying foundations
- Demolition and dismantling
- Building work
- Repairs, decorating and alterations
- Installing important systems like heating, lighting, power, water and ventilation
- Cleaning the inside of buildings following construction work
When under the CIS, the contractors deduct money from a subcontractor’s payments and then pass it on to HMRC. These deductions count towards the tax and National Insurance of a subcontractor.
You must register as a contractor if you:
- Pay subcontractors for construction work
- Have a business that doesn’t do construction but has an average annual spend of over £1 million on construction over a 3-year period
To those who do construction work for a contractor, don’t forget to register yourself as a subcontractor too.
It’s mandatory for all contractors to register for the scheme, which you can do easily online. Once you are registered, then you must file all monthly returns and verify new subcontractors through the online portal.
If you want more information, why not check out our rundown of your responsibilities as a contractor or you can contact us.