The construction Industry Scheme (CIS) is a scheme set up by HMRC to collect income tax throughout the year from self-employed people working in the construction industry. Anyone who is self-employed in the building or construction trade, should be paying tax under the CIS.
Construction companies should be deducting tax on behalf of their workers (subcontractors) and sending the money to HMRC as tax payments on the following basis:
– 20% for workers who have registered themselves as subcontractors with HMRC
– 30% for those who have not
This is different from other self-employed individuals who aren’t part of the construction industry, who would normally receive their payments gross, meaning no tax is deducted.
Who should register for CIS?
All contractors must register for the scheme. Subcontractors do not have to register, but deductions are taken from their payments at the above higher rate if they’re not registered.
GOV.UK explains how you can register for the CIS as a subcontractor and what information you will need to be able to register. There are different methods depending on whether or not you have already registered as self-employed and if you are working for yourself as a sole trader or through a different trading entity, such as a partnership or limited company.
It is important to remember that registration under the CIS is in addition to registration as self-employed for Self Assessment, therefore for those new to both self-employment and the CIS, two separate registrations will be required.
Get in touch
If you require further information on the CIS or would like assistance with the submitting returns, our payroll team are experienced in supporting numerous clients operating within the construction industry. Get in touch via payroll@pmm.co.uk or call 01254 679131.
A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.
