Construction Industry Scheme (CIS)
The Construction Industry Scheme (CIS) is a scheme that applies to payments made to self-employed workers and businesses within the Construction Industry.
Construction Industry Scheme Guidance
Contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). HMRC Guidance:
- Contractors must register for the scheme.
- Subcontractors do not have to register, but deductions are taken from their payments at a higher rate if they are not registered.
Standard rate, at this time, is 20% of all labour payments for registered subcontractors. The higher rate is 30% for non-registered subcontractors.
- These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Who Counts as a Contractor or Subcontractor?
Register as a contractor if either:
- you pay subcontractors for construction work
- your business does not do construction work, but you have spent more than £3 million on construction in the 12 months since you made your first payment
Register as a subcontractor if you do construction work for a contractor.
However, you must register as both if you fall under both categories.
Work covered by Construction Industry Scheme
CIS covers most construction work to:
- a permanent or temporary building or structure
- civil engineering work like roads and bridges
For the purpose of CIS, construction work includes:
- preparing the site. For example, laying foundations and providing access works
- demolition and dismantling
- building work
- alterations, repairs and decorating
- installing systems for heating, lighting, power, water and ventilation
- cleaning the inside of buildings after construction work
You do not have to register if you only do certain jobs, including:
- architecture and surveying
- scaffolding hire (with no labour)
- carpet fitting
- making materials used in construction including plant and machinery
- delivering materials
- work on construction sites that’s clearly not construction. For instance, running a canteen or site facilities
The CIS guide for contractors and subcontractors provides more detail on what is, and is not, covered by the scheme.
Is your business based outside the UK?
In short, the same CIS rules apply if your business is based outside the UK, but you do construction work as a contractor or subcontractor in the UK.
What Shaw Austin can do to help you!
Our Shaw Austin Team can help you:
- register as either a contractor or subcontractor.
- set up a PAYE scheme with HMRC, if you don’t already have one.
- file your monthly CIS returns and verify subcontractors for you.
We can also provide monthly pay statements and annual statements for your subcontractors.
Get in touch today to discuss your individual needs.
Shaw Austin are a firm of Chartered Accountants based in Chester. We support independent business throughout the UK. We take the headache out of business accounting and taxation by providing our clients with a personal service.
This article includes rates and data which is correct on date of publication. This is a general article to assist readers. Professional advice should always be taken in respect of your personal circumstances.
Published July 2022