Construction Industry Scheme (CIS) – Subcontractors
If you work in the Construction Industry you may be a:
• Or both
Actions for Subcontractors
• You should register for the Construction Industry Scheme if you work for a contractor and are self-employed, a partner in a partnership or the owner of a Limited company.
• A contractor pays you for the work you do for them. If you also use subcontractors to carry out work for you then you need to register as both a subcontractor and a contractor.
• You do not need to register as a subcontractor if you are employee; check your employment status.
• Once you have registered for CIS, a contractor will deduct 20% from any payments made to you for tax and national insurance, and will pay these deductions to HMRC. If you do not register for CIS, or you give the wrong business name and the contractor is unable to verify you, then a contractor must deduct 30% instead.
• Contractors will give you a Payment Deduction statement (PDS) which shows what they have paid you and the deductions they have made by the 19th of each month.
• You can also apply for gross payment status which means the contractor will pay you in full. If you have gross payment status you will pay any tax and national insurance due for your business profits at the end of the tax year, via Self-Assessment if you are a sole trader or partner, or, if you are a limited company subcontractor, through your corporation tax return.
• You must be on time with your tax returns and payments to keep gross payment status. HMRC will review this annually, to decide this. Refunds of CIS deductions can be claimed via Self-Assessment for sole traders and partners.
• If you are a limited company subcontractor you should report CIS deductions taken from your payments on an Employer Payment Summary (EPS) by the 19th of each month, and offset your company’s deductions against any other PAYE liabilities where possible. If you haven’t been able to off-set your company’s deductions against other PAYE liabilities during the year, you can log into the Government Gateway and claim a repayment following the end of the tax year using the CIS Repayment iForm.
• Tell HMRC of any changes in your business or if you stop trading.