Here are LeeP we often get asked questions about the Construction Industry Scheme and there is often confusion about whether clients need to be registered.
Essentially, like PAYE, the Construction Industry Scheme (CIS) is a special tax at source for those working in the construction industry. Businesses & soletraders in the construction industry are known as ‘contractors’ and ‘subcontractors’ and each entity may be a company or a self employed person.
The CIS rules apply to all types of construction work including jobs such as alterations, repairs, decorating and demolition.
Under CIS, contractors deduct income tax directly from subcontractor payments and pass this on to HMRC. These deductions act as advance payments on the subcontractor’s tax and National Insurance.
Does it apply to me?
Well, if you work solely and on your own for private home owners as a plumber, handyman, decorator, bathroom fitter etc and your contract of services is with the home owner or tenant then you do NOT need to register as a contractor; however, if you work for the same AND you have someone who works for you then you DO need to register as a Contractor, deduct tax from your Subcontractor and pay this tax to HMRC on a monthly basis.
Your subcontractors doesn’t have to register, but the deductions taken from their payments will be at the higher rate (30%) if they aren’t registered.
Here at LeeP Accountants we can take care of all of this for you as well as to send monthly statements to your subcontractors .
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