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Under CIS (Construction Industry Scheme), contractors deduct money from payments to a subcontractor and pass it on to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Contractors must register for the scheme. Registration for subcontractors is optional, but it is important to note that deductions are taken at a higher rate if not registered.
You should register for CIS as a contractor if:
- You pay subcontractors for construction work
- Your business does not do construction work but you have spent more than £3million on construction in the 12 months since you made your first payment
CIS covers most work done to a permanent/temporary building/structure and civil engineering work. Construction work includes:
- Preparing the site (laying foundations, access works etc.)
- Demolition/dismantling
- Building work
- Alterations/repairs/decorating
- Installing systems for heating, lighting, power etc.
- Cleaning after construction work
Follow the link to find out how to register: https://www.gov.uk/what-you-must-do-as-a-cis-contractor/how-to-register
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The Construction Industry is certainly a difficult one to master – turning your hobby into a career comes with plenty of ups and downs. Knowing the key mistakes to avoid and the top tips to follow is essential for any business.
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