The Construction Industry Scheme (CIS) is a tax deduction scheme which allows contractors to deduct money from a subcontractor’s payments and pass it to HMRC, which count as advance payments towards the subcontractor’s tax and National Insurance.
To register for the CIS, you will need:
- Legal business name
- National Insurance Number
- Unique Taxpayer Reference (UTR) number
- VAT registration number
Work covered by CIS:
- Preparing the site
- Demolition and dismantling
- Building work
- Alterations, repairs and decorating
- Installing systems for heating, lighting, power, water and ventilation
- Cleaning the inside of buildings after construction work
CIS Gross Payment Status allows your company to receive its gross turnover without any deductions at source – you will be responsible for paying Corporation Tax, Income Tax and National Insurance (NI) as required.
Applying for Gross Payment Status online:
1.) Sign into Government Gateway
2.) From ‘Your tax account’, go to ‘Other services’
3.) Choose ‘Construction Industry Scheme – Subcontractors’
You will need:
- To show you’ve paid your tax and NI on time in the past
- To show your business does construction work in the UK
- To show that your business is run through a bank account
HMRC will look at your turnover for the last 12 months, and it must be (ignoring VAT and cost of materials):
- £30,000 if you’re a sole trader
- £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
- £30,000 for each director of a company, or at least £100,00 for the whole company
You must declare your payments as income at the end of the tax year in:
- Your Self Assessment Tax Return (sole trader or partner)
- Your Corporation Tax Return (limited company)
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