Construction Industry Scheme (CIS)
The Construction Industry Scheme (CIS) applies to payments for construction work. A contractor must make tax deductions from subcontractors and pass them to HMRC.
Construction Industry Scheme (CIS)
Construction is one of the most important industries in the UK, and a key part of the economy.
If you're working in construction or thinking about starting a construction business, it's important to understand how the Construction Industry Scheme works.
At DS Burge & Co we help take you through CIS, explain how it impacts your tax situation and deal with HMRC on your behalf.
![Advantages of using DS Burge & Co's Construction Industry Scheme service:](https://www.dsburge.co.uk/wp-content/uploads/2019/08/burge_IMG_complete-Final-1.jpg)
Advantages of using DS Burge & Co's Construction Industry Scheme service:
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- You get a dedicated manager and 24/7 access to your business financials online.
- We take the stress and hassle of keeping on top of your records, so you can focus on running your business and stay safe in the knowledge you're meeting your CIS obligations to HMRC and your subcontractors.
- We'll explain everything, from registering for CIS with HMRC to collecting the relevant information you need from your subcontractors.
We help you get in control, save money and save time
Schedule a free consultation to find out how we can help with the Construction Industry Scheme and deal with HMRC on your behalf.
![What is the Construction Industry Scheme (CIS)](https://www.dsburge.co.uk/wp-content/uploads/2022/07/Construction-Industry-Scheme-Plumber.png)
What is the Construction Industry Scheme (CIS)
CIS applies to most payments for construction work from a contractor to a subcontractor. It works similarly to PAYE. The contractor is responsible for deducting tax from the subcontractor’s earnings and paying that directly to HM Revenue and Customers (HMRC) on the subcontractor’s behalf.
Testimonials
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- DSBurge&Co provide and outstanding service for my company. I have used them for 20 years and see them as essential partners in my business providing a wide range of accounting services and financial advice. They definitely helped me to grow my business.David B.7/20/2021
- Would highly recommend. Have been working with Kieran for a few years now and the team are fantastic. Very calm, personable and knowledgable.Scott H.1/26/2023
- I've been using DS Burge for many years and they have always provided a great service. I use them for my personal finances, and for two businesses also. Very knowledgeable in all areas, and always available and helpful.Julian W.1/26/2022
- excellent service and very helpful.M B.2/24/2024
- I always feel I am being given a personal service with Darius. He responds to any queries immediately and I trust his advice implicitly. Also he is a very nice man and his fees seem to me to be reasonable. A very professional service that I highly recommend.Sara H.7/27/2021
- I remember when I initially was in touch with Darius probably about a year ago. I was upset & had a lot going on. Darius assured me everything would be okay and requested that I gather all the necessary information, enabling Darius to submit. Throughout the process, Darius has kept me informed and has been great with me. If I had any queries and were unsure about anything he has guided me throughout. More importantly, I have built a great relationship with Darius and trust him fully . Thank you for being great and getting me through this process. Kind Regards NadiaNadia B.10/26/2023
- Recommended by a friend and I would recommend to anyoneJoachim M.1/12/2024
- Have used DS Burges for a number of years now and always feel secure knowing they are looking after my affairs professionally and attentively.Timothy S.1/26/2022
- I've been working with Kieran and the team at DS Burge since 2017. They were invaluable in helping me to setup my business and continue to provide a fantastic service, both from a pure accounting perspective and advisory as needed.Peter B.1/26/2022
- A great company to work with, brilliant communication, excellent attention to detail, and nice people to boot. Since working with DS Burge & Co I have expanded the use of their services. Recommended.Richard S.1/26/2022
- I was recommended DS Burge several years ago by a friend to do my tax return. Kieran is always a calm guide & explains all points clearly. It gives me peace of mind to work with a professional. I strongly recommend this firm.Leonora T.1/27/2024
- Keiran and his team are professional and really helpful, as a small business they understand the need for support. Professional and not over priced.Caroline E.1/26/2022
- Always helpful, insightful and responsive. Easy to work with and professionally acute.Brian M.7/03/2021
- i have to give DS Burge& Co 5 stars as they are by far the best accountants we have had for over 40 yearsSandra B.1/26/2022
- Kieran was excellent in sorting out my tax return, pain free process & kept me in the loop the whole way through. I can’t recommend enough. Thank you again.Lianne B.10/26/2023
Contractor vs Subcontractor role in the Construction Industry Scheme (CIS)
Contractor
You are defined as a CIS contractor if you are working on projects in the construction industry and use subcontractors to do any or all of this work.
As a contractor, it is your responsibility to deduct tax from each payment to your subcontractors and pay this over to HMRC on their behalf every month. The rate of tax you deduct is dependent on the status of the subcontractor.
In addition to handling their CIS deduction, it is also your responsibility to provide each subcontractor with statements showing the deductions you have made against their earnings. Payments must also factor cost of materials that are deducted.
If you are a contractor and want help managing your payments and other tax matters then please get in touch.
Subcontractor
You are defined as a CIS subcontractor if you are working on projects for contractors in the construction industry. The deductions do not apply to all types of work. In order to see a guide of all work that is and isn’t covered, view this CIS guide for contractors and subcontractors. Alongside typical construction work, CIS applies to jobs such as repairing and decorating.
As a subcontractor it isn’t necessary for you to register for CIS. However, if you do, you can reduce the tax deducted from the default 30% down to 20%. Furthermore, if you pass three the three tests summarised below, you can apply for “gross payment status” which will allow the contractor to pay you in full with no CIS deductions:
- Business Test – The business is run through a bank account
- Turnover Test – The business has a net construction turnover of £30,000 each year for each relevant person (director and beneficial shareholder if the company is close) or at least £100,000
- Compliance Test – The business has been up-to-date with its tax filings and payments over the previous 12 months
Deductions taken on a subcontractor's behalf will count as advance payments towards their Income Tax and National Insurance contributions.
As this tax is deducted at source without factoring in the subcontractor’s annual tax-free personal allowance and any deductible expenditure, when they come to fill in your self-assessment tax return at the end of the tax year, it is common for them to receive a tax refund.
Under CIS it is also possible for you to be classified as both contractor and subcontractor.
![Contractor vs Subcontractor role in the Construction Industry Scheme (CIS)](https://www.dsburge.co.uk/wp-content/uploads/2022/07/Construction-Industry-Scheme-Plumber.png)
![How to Register for CIS](https://www.dsburge.co.uk/wp-content/uploads/2022/07/Construction-Industry-Scheme-Plumber.png)
How to Register for CIS
You can register with HMRC for CIS through the gov.uk website:
- Contractor CIS registration through the gov.uk website
- Subcontractor CIS registration through the gov.uk website
If you are both a contractor and a subcontractor, you will need to register for the Construction Industry Scheme separately as both.
Don't delay! Get in Touch
If you are considering switching accountants, we can help make the switch smooth, quick and hassle-free.
We can help manage CIS on your behalf
To allow a contractor to process CIS deductions subcontractors must provide their name, unique taxpayer reference and national insurance number (or company registration number) when entering into a contract. These details allow the contractor to check the CIS status of the subcontractor and deduct the correct amount of tax.
![We can help manage CIS on your behalf](https://www.dsburge.co.uk/wp-content/uploads/2022/07/Construction-Industry-Scheme-Plumber.png)
Additional Services to Help with Your Tax
Alongside advising on CIS, our team can help review your tax requirements to ensure you meet all regulations and deadlines set by HMRC. Whether you need assistance submitting a personal tax return or want to look at setting up a limited company, we can help prepare and plan how to optimise your tax position.
Our Fees
We provide all quotes free of charge. After a free initial consultation to understand your situation, we will explain what you will need from us along with our fees in advance. With DS Burge & Co supporting your CIS requirements there is total transparency on what you are getting.
Whether a CIS contractor or subcontractor, our fees will also be tax-deductible to you.
We already help a large number of clients in the construction industry. If you would like to find out more about CIS, and get a free quote, please don’t hesitate to get in touch