WHAT IS THE CONSTRUCTION INDUSTRY SCHEME (CIS)?
CIS is a UK tax scheme which makes deductions as you are paid, that count as advance payments for your tax and National Insurance liabilities. Construction industry subcontractors will need to register for CIS by calling 0300 200 3210.
I AM A LIMITED COMPANY. DOES CIS APPLY TO ME?
It is important to remember that CIS can be applied to subcontractors and also Limited Company contractors offering services within the construction industry.
ARE EXPENSES SUBJECT TO CIS?
Expenses that you are being reimbursed by Stonebridge and/or our clients will be subject to CIS tax, unless they are for materials or hired equipment and a receipt is provided.
HOW MUCH TAX WILL I PAY UNDER CIS?
How much tax you will pay all depends on the verification status of your UTR number. Most subcontractors will have their UTR number verified at 20%. Once you receive your personal or company UTR number, you will need to call the CIS helpline to verify, otherwise you will be taxed at 30%. If you meet certain turnover, business and compliance tests, you may be eligible for a gross (0%) payment status.
HOW CAN I APPLY FOR GROSS PAYMENT STATUS?
To qualify for gross payment status, you must show HMRC that your business passes some tests. You’ll need to show that:
you’ve paid your tax and National Insurance on time in the past
your business does construction work (or provides labour for it) in the UK
your business is run through a bank account
HMRC will then look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least:
£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 Limited Company (or at least £100,000 for the whole company)