What Is The Construction Industry Scheme And How Can We Help You?
The Construction Industry Scheme (CIS) is a kind of pay-as-you-go approach to tax and national insurance for construction industry subcontractors – but it’s more complicated than the usual PAYE rules on income tax, for example.
Different rules apply to contractors, registered subcontractors and non-registered subcontractors If you are a contractor, much of the responsibility falls on you to check the status of the subcontractors you hire and make the appropriate deductions from what you pay to them.
These deductions are paid directly to HMRC, but they are not lost by the subcontractor. Instead, they count as advance payments towards their tax and national insurance contributions – again, similar to PAYE on most employees’ income tax.
Contractor or Subcontractor?
Things get even more complicated if you operate as both a subcontractor and a contractor, as you must follow both sets of CIS rules.
You can’t avoid this simply by not registering with CIS either, as unregistered subcontractors must pay deductions at an even higher rate. It therefore makes sense to register and keep your status updated if anything changes in the future.
As a contractor, you must:
- Register with CIS.
- Verify whether subcontractors are registered
- Calculate the correct deductions for each subcontractor
- Make the deductions and send them to HMRC
- Provide each subcontractor with a statement of deductions every time they are paid
- Make regular status submissions to HMRC including an annual CIS deduction statement
It’s a complex issue that incorporates all of the usual stress of calculating and paying the correct amount of tax, along with proving a worker’s status as self-employed, so it’s crucial to get construction payroll calculations right first time.
Avoid CIS enforcement action by HMRC
CIS compliance is an area that is monitored closely by HMRC and they will check to make sure you are following the correct rules, including verifying the status of subcontractors as employed or self-employed.
Losing a challenge against your recorded status of a subcontractor can be costly and HMRC will not accept ignorance as an excuse.
With Wagemate’s help, you can stay on the right side of CIS compliance, from verifying the status of subcontractors, to making the correct deductions and paying them to HMRC.
Our CIS payroll service can help in all of the following areas:
- Verify subcontractor CIS status with HMRC
- Apply the appropriate CIS rate of 20% or 30%
- Calculate and make the appropriate deductions
- Process and email subcontractor payslips
- Pay correct amounts to subcontractors via BACS
- Compile HMRC CIS status submissions and annual deduction statement
For help in all of these areas and with any other aspect of construction payroll, speak to Wagemate today on 03330 102 102 or email@example.com.