Construction Industry Scheme
You may think that the cost of materials and timescales are the main cause of concern within the building industry. However, The Construction Industry Scheme (CIS) is something you will need to consider when working within the construction sector, especially if you are employed as a subcontractor.
For example, construction businesses often engage independent subcontractors such as: bricklayers, plumbers, and roofers etc to work on projects with them. A contractor then deducts money from a subcontractor’s wages and is passed onto HM Revenue and Customs (HMRC).
This Construction Industry Scheme mainly applies to Contractors and their Subcontractors that are acting as temporary employees. Contractors must register for the scheme, where as Subcontractors aren’t obliged to register, but tax deductions are taken at a higher rate if they’re not registered for CIS.
Essentially, this is how HMRC collects Income Tax from people who work in and around the building industry as subcontractors rather than employees.
Most construction activity is covered under CIS including: permanent or temporary buildings or structures, roads, bridges, preparation of the site, laying foundations, providing access works, demolition and dismantling, alterations, repairs and decorating, in addition to the installation of heating, lighting, power, water and ventilation systems.
How it works
Once you register with HMRC, we can invoice you for your sub-contractor to carry out the work and subsequently receive payments via BACS transfer. Our team are able to manage your sub-contractors CIS Tax Statements, keeping you compliant and ensure you are on the right side of the law.
You are free to accept projects and begin the work, while having the peace of mind that any subcontractor you use, his or her labour is invoiced and a certain amount is kept back as tax under the CIS, and is paid over to HMRC. The subcontractor in question should then record the amount of tax that has been deducted from his invoices and showcase this on his tax return, so further tax isn’t paid out.
How MCL Payroll can help
We know that construction work is a busy and time-consuming industry. MCL Payroll are able to provide a full service solution to your CIS requirements and take the hassle out of this often complex area of construction operations.
With our help as your sub-contract labour supplier, we assist to prevent HMRC from reclassifying self-employed sub-contractors as employees, and reducing the risk of Employment Rights claims.
In addition, we handle your CIS compliance responsibilities including; monthly returns, gross payment and other important data relating to you and your profession.
Any data collected is anonymised, so all you have to do is contact us via phone or address if you have any questions or choosing MCL Payroll to oversee your CIS application from start to finish.
CONSTRUCTION INDUSTRY SCHEME FAQS
What is CIS?
Construction Industry Scheme or otherwise referred to as CIS involves specific rules and regulations for construction businesses. These particular rules can affect both contractors and subcontractors.
Businesses in the demolition, repairs, building and decorating areas will be covered by CIS.
How do contractors register for CIS?
In order to register as a contractor, a business must be operating in a construction sector and must appoint a subcontractor to carry out some of that work.
The process of registering as a contractor will involve completing an application form from HMRC.
How do subcontractors register for CIS?
In order to register as a subcontractor, a business must carry out construction work for a contractor.
The process of registering as a subcontractor will involve completing an application form from HMRC.
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