Whether you work in the construction field or are here to get informed for fun, we have answers for most of the questions that are going through your head right now regarding Construction Industry Scheme. What, how, and why will get specific answers in just a few sentences so focus on reading and save yourself from falling into an overwhelming spiral of not knowing what to do.
Construction Industry Scheme also known as shortly CIS, is a scheme set up by HMRC (HM Relations & Customs) to collect tax for anyone who works in the construction field. It outlines rules with contractors’ and subcontractors’ payment deductions. But what do you gain from this scheme and where to start?
Construction Industry Scheme applies to sole traders, partnerships, or businesses that work in construction. To make sure you take part in this scheme you need to register first. Construction Industry Scheme registration is an easy-to-follow procedure and it is by far the most important one. You need to follow some simple steps that include giving out information about you or the company you work for. You have to make sure you give the full legal business name for your company/business and some other details including your National Insurance number, VAT number in case you’re registered, and the Unique taxpayer reference number (UTFR) for your business. All you have to do besides that is make sure you give the right information as you can face penalties for false registrations that cannot be verified.
Construction Industry Scheme & its tax scheme
Once you register for the construction industry scheme, you start wondering how payments and taxes work. Under Construction Industry Scheme you have two options to get paid. The most used one includes payment done on deductions. This means that your contractor makes a 20% deduction on the full amount before getting you the payment. This amount that is taken goes to HMRC and helps you to get your taxes paid. In most cases, it not only gets your taxes paid but also a refund at the end of the year if you keep records of everything.
Secondly, you can get paid under Construction Industry Scheme gross payment. To do so, you need to be registered for gross payments first. This stops your contractor from making any deduction on the full amount. You get your full payment but you still have to pay for taxes yourself. These payments for taxes and National Insurance contributions are done later on through your tax return to HMRC.
But what if you haven’t been registered yet? You should keep in mind that not being registered under CIS scheme makes you get a higher deduction rate. For now, that goes to 30% and that’s why you should reconsider registering if you haven’t decided on what to do yet.
What is covered when you’re registered for Construction Industry Scheme?
Construction Industry Scheme covers construction work done permanently or temporarily on different buildings, structures, roads, or any civil engineering work. This applies to specific cases like altercations, general buildings, or general work done in construction. Preparing the site or laying foundations is also included. Things like decorating, repairs, demolition, dismantling, or installing heat, power, lighting, and ventilation systems are included as well.
You should also keep in mind that not every work that can be done is included. Working in the construction field on things that are not construction related as running a canteen is for sure not included. Architecture or surveying, carpet fitting, or delivering materials are not included as well. These and other specific things similar to what we mentioned cannot be covered and you should keep that in mind to avoid problems later on.
A simpler alternative for you
By far we showed you a general view of how everything works. We’re sure that it might be overwhelming at first and you might be thinking to look for an easier alternative. But before giving up and searching for anything else related, we have to give you an answer specific to your needs. Here at Blimey Solutions, we find professional solutions to everything. This includes Construction Industry Scheme accounting as well. Our experienced staff makes sure to help you on this journey by assisting you with a full-service managing accountancy package. Save yourself time by letting professionals like us help you out. We have a solution for everything you need.
A really important thing you should do is to make sure to keep records of everything once you’re registered under CIS. Keeping records helps you later on with your tax return. It makes it easier to prove anything in case of misunderstandings and it’s really important as it makes you look more responsible for what you do. But what to keep records on? Keeping a record of everything includes invoices you make, all bank statements, cashbooks or mileage records, a receipt for any purchase done, and payment deductions statements. To make it easier for you, we offer bookkeeping services tailored to your needs. This helps you on feeling secure and prevents you from feeling stressed about anything.
Secondly, we know how hard it might be to keep everything under control. Tax returns need specific dealings and we’re here to help you out with that. Our expert team deals with HMRC and makes sure to file the returns you get. You can also request full annual account production from our team. This service includes business taxes too, therefore our professionals make everything easier for you.
These and much more services including Payroll & Salary, or Company Secretarial can be provided to you by professional accountants with years of experience. This helps you not only on making sure everything is okay for you or your company but also into getting to learn more about everything CIS-related. And if it all seems overwhelming to you, we help you out step by step. This includes help with Construction Industry scheme registration and compliance as well. Save yourself time and extra work by letting experts like us deliver high-quality service for you.