The Construction Industry Scheme (CIS) implies the technique by which tax is being deducted from the subcontractors at source for onward payment to the HM Revenue and Customs. Furthermore, it highlights specific rules for deducting tax and also the national insurance for all the employees within the construction industry. The two common businesses within the construction sector are referred to as contractors and subcontractors and they can be any of self employed persons, partnerships or corporate organisation.
Contractors in Construction Industry Scheme
As long as your business hires subcontractors for the purpose of constructions, otherwise called the mainstream contractor, you are grouped under contractor. In addition, if your kind of business utilises an around £1 million pounds and above spanning across a period of 3 years purely on construction operations are deemed contractors. Meanwhile, supposing you are hired to operate in domestic households and you now seek the service of subcontractor, it implies that you have fallen under a CIS contractor and therefore require running CIS. On the other hand, supposing you are a private householder, then you are not a contractor irrespective of your budget. It is noteworthy to state that all constructions carried out on fixed or temporal structures or installation is adequately taken care of by CIS Scheme.
Subcontractors within CIS
This refers to anyone who accepts to undertake any construction work for a contractor. Some of the example includes the sole traders, partnerships and firms working for contractor, Labour agencies, staff bureau using their staff for construction work under a contractor, gang leaders and many more. Please note that a single person may be a contractor and a subcontractor simultaneously.
Indeed, implementing the construction industry scheme and PAYE can be challenging for uncountable number of businesses. In fact, it can be time consuming and costly unless it is handled by professional accountants. We can successfully handle your construction Industry Scheme accounting including all the payroll functions at affordable cost.
Under Construction Industry Scheme, some of our functions include:
For more information and specific advice on CIS, please contact us.