Construction Industry Scheme

In the Construction Industry, sub-contractors do work on behalf of contractors, and payment is treated similar to that of PAYE.

Money is deducted at source when making payments to sub-contractors and then handed over to HMRC contributing towards their National Insurance and Tax.

It is compulsory for all contractors to register for CIS, though it is not compulsory for all sub-contractors to register as CIS. Keep in mind that by not registering under CIS will incur 30% withheld tax by your contractor, otherwise it would be 20%.

Being due a refund as a sub-contractor is quite common as the contractor withholds 20/30% of your gross income. However, refunds are reduced by payment of National Insurance Contributions when it is time to submit your Tax Return.

Accurate record keeping is a must!
HMRC can ask to see these records at any time and failing to do so will incur a penalty, get some professional assistance from MTD if you want to ensure you are making the correct claim.

Get in touch with us at More Than Directors to find out how we can support you through every step of this process!