Construction Industry Scheme - Payroll Information from Seago & Stopps Payroll Solutions Limited
The Construction Industry Scheme (CIS) provides for a specific set of rules concerning the payment of subcontractors working in the construction industry.
Contractors and the CIS
A contractor wanting to engage others to work for them must determine if the work involved falls within the scope of the CIS. Working out whether or not the worker is employed or self-employed can be difficult, and CIS accountants, Seago & Stopps Payroll Solutions Limited will be able to assist you in deciding whether a subcontractor should correctly be classified as self-employed.
Contractors will need to do the following under the CIS:
- Register for the scheme
- Make the appropriate deductions
- Keep appropriate records
- Submit monthly returns to HMRC, even where no payments are made
- Issue payment statements to subcontractors
- Verify subcontractors with HMRC to establish whether payments should be gross or net
Subcontractors and the Construction Industry Scheme
Subcontractors working under the Construction Industry Scheme must register with HMRC prior to beginning work and must keep the authorities informed of any changes to the business - for example, the address, structure, partners or name of business.
Upon registering for CIS, subcontractors are set up to receive payments 'under deduction'. This means that contractors will deduct 20% from most of the value of the invoices and pay the sum to HMRC. Subcontractors not registered under CIS will have tax deducted at the higher rate of 30%.
Deductions will not be made for the following:
- Materials
- Manufacturing or prefabricating materials
- Construction Industry Training Board levy
- Plant hire
- VAT
- Consumable stores
A subcontractor can apply to be paid gross, with no deductions, if their business meets certain qualifying conditions.
We can update you on the current regulations. For more help with your CIS needs, contact Seago & Stopps Payroll Solutions Limited today.