Construction Industry Scheme – What to Know – Accounts Navigator Associates

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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