CIS Returns

• Core Construction Businesses. If your company's livelihood is construction work, like property development, building firms, utility companies, or infrastructure specialists, then CIS is mandatory for you to pay tax.
• Deemed Contractors. Not directly involved in construction? You might still be pulled under the CIS umbrella. If your business, like a property investor renovating a building, spends a significant amount on construction projects, you'll be classed as a "deemed contractor" and need to comply with CIS.

• Self-Employed. CIS applies to any self-employed individual or business hired for construction tasks. This can be a plumber, electrician, bricklayer, decorator, or any other specialist contributing to a construction project.
• Key Distinction—Employees vs. Subcontractors. It's crucial to remember that CIS only applies to payments to subcontractors, not regular employees. Employees' taxes and National Insurance contributions are handled through the standard payroll system (PAYE), making CIS irrelevant in their case.

*While registering for CIS isn't mandatory for subcontractors, it offers advantages for those who participate in the scheme.

Once this is confirmed, we can move on to the task of assisting you with the CIS process.

We offer comprehensive training sessions specifically designed to address your CIS obligations and best practices. This training can cover topics such as:

• Identifying subcontractor payments subject to CIS deductions.
• Calculating and deducting the correct amount of tax at source.
• Maintaining proper CIS records for HMRC audits.
• Understanding the penalties associated with non-compliance.

• You file monthly CIS returns detailing the payments made to subcontractors and the amount of tax deducted.
• This is submitted to HMRC (tax authority) through the Payment and Deduction Service (PDS).

• Your Self-Assessment return, filed annually, declares your total taxable income for the year.
• This includes your business profits, any rental income, and other taxable earnings.

The Connection:

The tax you deduct from subcontractors under CIS is not considered your income. It's simply collected on HMRC's behalf. Therefore, you don't pay any tax on this deducted amount in your Self-Assessment return.

However, the CIS return connects to your Self-Assessment in these ways:

• You need to keep detailed records of all CIS payments, including the gross amount paid, the tax deducted, and the subcontractor's details.
• These records are crucial for accurately completing your Self-Assessment return. They help ensure you declare your correct income and claim a tax rebate if necessary.
• HMRC may use your CIS returns to cross-check the information you provide about subcontractor payments in your Self-Assessment.

These are HMRC's requirements:

• A good history of tax compliance. Filing tax returns and making payments on time.
• Expected turnover. Demonstrating you're a stable business with a certain level of income.
• Subcontractors can apply when they first register for CIS or apply later if they've already registered.
• Online registry is available through the Government Gateway account or by calling the CIS helpline.

The Construction Industry Scheme (CIS) is a tax deduction scheme which affects most construction work carried out in the UK, requiring contractors to deduct money from a subcontractor's payments and pass it to HM Revenue and Customs (HMRC).

To register for CIS as either a contractor or subcontractor in the UK, you must apply through the HMRC website, ensuring you have your business’s UTR number and NI number if you're a sole trader.

CIS returns must be filed by the 19th of each month, covering the previous tax month's contractor payments, to avoid penalties.

To verify a subcontractor for CIS, contractors need to use the HMRC's online service, requiring the subcontractor’s UTR and NI number or company registration number.

Under CIS, expenses such as materials, equipment directly used for a job, and VAT charged by a VAT-registered supplier can be deducted.

Submitting CIS returns online is done through the HMRC website, where contractors must log in to their HMRC online account and fill in the CIS return form before the monthly deadline.