What is CIS?
If you work in the construction sector then you will undoubtedly be aware of the Construction Industry Scheme or CIS as it is commonly referred to. If you are new to contracting or considering contracting for the first time or are new to the construction industry then you might need to understand more about the scheme and how it works.
The scheme is applicable to contractors and subcontractors who are self-employed and work in construction in the UK, this includes companies, partnerships and self-employed individuals. The scheme does not apply to individuals working in construction who are employed.
UK based construction workers working outside the UK are not covered by the scheme.
It is a requirement that individuals or businesses register with HMRC for CIS. Self-employed individuals will need a UTR number as well as their NI number and business name. For VAT registered companies the VAT registration number is also required.
How does it work?
Contractors deduct money from their subcontractors’ pay to cover their tax and national insurance contributions. Subcontractors registered on the scheme have tax deducted from their payments at a flat rate of 20%, unless they are registered for gross payment.
It is worth noting that subcontractors don’t have to register, but deductions are taken from their payments at a higher rate of 30% if they’re not registered so it is definitely worth ensuring you are registered.
What types of work are covered?
CIS covers all construction work in the UK according to the list provided by HMRC this includes:
- site preparation
For workers in the construction industry, registered CIS, Sterling can help with our self-employed CIS service. We will take care of all necessary deductions and ensure that you are operating compliantly. If you are considering contracting and would like more information please get in touch.
More information on CIS and how to register with HMRC is available here.