Accounts Navigator
The Construction Industry Scheme (CIS) is a tax deduction scheme which allows contractors to deduct money from a subcontractor’s payments and pass it to HMRC, which count as advance payments towards the subcontractor’s tax and National Insurance.
To register for the CIS, you will need:
- Legal business name
- National Insurance Number
- Unique Taxpayer Reference (UTR) number
- VAT registration number
Work covered by CIS:
- Preparing the site
- 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
CIS Gross Payment Status allows your company to receive its gross turnover without any deductions at source – you will be responsible for paying Corporation Tax, Income Tax and National Insurance (NI) as required.
Applying for Gross Payment Status online:
1.) Sign into Government Gateway
2.) From ‘Your tax account’, go to ‘Other services’
3.) Choose ‘Construction Industry Scheme – Subcontractors’
You will need:
- To show you’ve paid your tax and NI on time in the past
- To show your business does construction work in the UK
- To show that your business is run through a bank account
HMRC will look at your turnover for the last 12 months, and it must be (ignoring VAT and cost of materials):
- £30,000 if you’re a sole trader
- £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
- £30,000 for each director of a company, or at least £100,00 for the whole company
You must declare your payments as income at the end of the tax year in:
- Your Self Assessment Tax Return (sole trader or partner)
- Your Corporation Tax Return (limited company)
~
~
Knowing how to take control of your business finances to maximise profits can be difficult, especially with the current climate. Knowing the common mistakes to avoid can be difficult and can leave you feeling unsure.
This article is copyright © 2024
