What is the Construction Industry Scheme (CIS)?

If you are a contractor in the construction industry, under the Construction Industry Scheme (CIS), you must deduct money from your subcontractor’s payments and pass it to HM Revenue and Customs (HMRC).

The deductions count as advance payments towards your subcontractor’s tax and National Insurance.

Maybe your business is actually a contractor and a subcontractor. You pay subcontractors for construction work but also work for main contractors. It is important that when you operate as a contractor you follow the CIS rules for contractors and when working as a subcontractor you must follow the CIS rules for subcontractors.

What are your Contractor responsibilities?

As a contractor, you must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

Before you can make a payment to a subcontractor for construction work, you may need to verify with HMRC that the subcontractor is registered. Once verified you must calculate and pay CIS tax and provide a payment statement to the sub-contractor each time they are paid You are also fully responsible for making status submissions to HMRC including the annual CIS deduction statement.

The scheme can be complicated to run and HMRC perform checks on companies to monitor for CIS compliance. The status of workers, whether they are genuinely self- employed or an employee is a contentious area.

If you are unfortunate enough to be the subject of an HMRC visit and they successfully challenge the status of some of your workers it can be very expensive. Not being aware of CIS rules and the associated tax obligations are not accepted as valid reasons for non-compliance.

Wagemate provides a comprehensive CIS service to keep you compliant

Wagemate provides everything you need to pay your sub-contractors under the CIS scheme and keep HMRC happy and your business compliant.

  • We verify the operatives CIS status with HMRC and apply the correct tax rate (20% or 30%).
  • All CIS tax due will be calculated accordingly
  • All payslips will be processed and emailed
  • Your sub-contractors are paid by BACS
  • We take care of your status submissions and annual CIS deduction statement

Keep CIS compliant and contact Wagemate now for a no-obligation quotation

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