This is just one in a series of blogs we are running regarding The Construction Industry Scheme (CIS) in this first blog we explain what it is and does it apply to you. Keep following the series of blogs relating to this topic for more information of what to do if CIS does apply to you.
The Construction Industry Scheme (CIS) applies to contractors; subcontractors and anyone who has a high annual spend on construction, even if their main work isn’t in the industry. If your firm is involved in construction, it may need to register with HMRC under CIS.
CIS covers most construction work to buildings, including site preparation, decorating and refurbishment; however there are a few exceptions:
You don’t have to register if you only do certain jobs, including:
• architecture and surveying
• scaffolding hire (with no labour)
• carpet fitting
• delivering materials
• work on construction sites that is clearly not construction, eg running a canteen or site facilities
• Private householders are never treated as CIS contractors, no matter how much they spend on construction operation
If you do work in construction and the exceptions do not apply to you then you are either going to be a contractor or a subcontractor and will need to register under the CIS scheme with HMRC.
You need to register as a contractor if either:
• you pay subcontractors for construction work
• your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period
You need to register as a subcontractor if you do construction work for a contractor. This will count whether you do the work yourself, get your employee to do it or you use your own subcontractors.
You must register as both if you fall under both categories.
Still not sure if this applies to you, it may be that you are an actual employee.
If you’re an employee then CIS doesn’t apply to you. You’re classed as an employee if your contract is a ‘contract of employment’. If this is the case, you’ll pay tax through PAYE (Pay As You Earn) rather then through CIS.
Your employment status depends on the terms of each piece of work you take on. It’s possible to operate as a self-employed subcontractor on one contract and then as an employee on the next. If you’re a construction industry contractor it’s your responsibility to decide on an individuals employment status when you take them on.
To find out if you’re working as an employee or a contractor you can use the employment status indicator tool on the HMRC’s website.
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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