This is just one in a series of blogs we are running regarding The Construction Industry Scheme (CIS) in previous blogs in the series we have looked at what it is and does it apply to you; and what to do if you’re a contractor. This blog will be looking specifically at subcontractors.
If you work within the construction industry you will have heard this term CIS and hopefully you will have read our first blog “CIS what is it? Does it apply to me?”. This will have explained what you are catagorised as within the scheme. This article looks specifically at Subcontractors.
You have determined that you are a subcontractor within the Construction Industry Scheme (CIS) what does this now mean?
Well… if you are a company, self employed individual or in a partnership, and you are definitely not an employee of the contractor then you must register for the CIS scheme with HMRC.
Under CIS contractors must verify their subcontractors with HMRC and they then tell them the rate of deduction they must make to sub contractors payments.
Generally subcontractors who are registered under the scheme have 20% deducted from contractors which they then pass onto HMRC. These deductions count as an advance payment towards your tax and national insurance liability for the tax year.
If you don’t register, contractors must deduct the highest deduction rate of 30% from your payments.
If certain circumstances are met you can apply for gross payment status. If you would like more information regarding this contact us directly.
If you are a company that has deductions taken from income under work performed as subcontractor, you need to include the amount of deductions made each month in your RTI submissions under the PAYE scheme. You should offset the deductions against the amounts payable for PAYE, NIC and student loan repayments from your employees. At the end of the tax year once final submissions have been sent any deductions in excess of any PAYE which could not be offset can be refunded.
Our final blog within this series will look at what to do if you are both a contractor and a subcontractor.
In the meantime if you have specific questions regarding CIS why not contact one of our team who would be only too happy to help you.
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