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Construction Industry Scheme (CIS)

Construction Industry Scheme (CIS)

 

The Construction Industry Scheme (CIS) covers most construction work to buildings, including site preparation, decorating and refurbishment.

HMRC state that you must register as a contractor with the Construction Industry Scheme (CIS) if:

 

  • you pay subcontractors to do construction work
  • your business doesn’t do construction work but you usually spend more than £1 million a year on construction

 

There are two types of contractor. You must register as a contractor if either of these apply to you.

Mainstream contractor

 If your business is construction and you pay subcontractors for construction work, you’re a ‘mainstream’ contractor. This applies if you’re a:

  • builder
  • labour agency
  • gangmaster (or gang leader)
  • property developer

 

Deemed contractors

You count as a ‘deemed’ contractor if your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period. This could apply to:

  • housing association or arm’s length management organisations (ALMOs)
  • local authorities
  • government departments

 

CIS doesn’t apply if your work is:
  • paid for by a charity or trust
  • paid for by a governing body or head teacher of a maintained school on behalf of the local education authority
  • on the subcontractor’s own property and worth less than £1,000 excluding materials – you must call the CIS helpline to get an exemption

 

There are also certain jobs that are exempt from the CIS scheme, these include:
  • architecture and surveying
  • scaffolding hire (with no labour)
  • carpet fitting
  • delivering materials
  • work on construction sites that is clearly not construction, for example running a canteen or site facilities

 

HMRC’s CIS guide for contractors and subcontractors explains in full what type of work is covered by CIS.

You can also contact HMRC’s CIS Helpline for more information

 

There are several rules you must follow as a contractor to comply with HMRC regulations for the CIS scheme. They are:

  • You must register for CIS before you take on your first subcontractor.
  • You must check if you should employ the person instead of subcontracting the work. You may get a penalty if they should be an employee instead.
  • Check with HMRC that your subcontractors are registered with CIS.
  • When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.
  • You’ll need to file CIS300 monthly returns and keep full CIS records – you may get a penalty if you don’t.
  • You must let HMRC know about any changes to your business.

 

Payroll Services Outsourced Ltd can assist you with your duties as a member of the CIS scheme. This can be in addition to payroll processing or as a stand alone service.
Contact Us to discover how we can help you.