The Construction  Industry Scheme (CIS) is a tax deduction scheme in the UK, designed for contractors and subcontractors in the construction sector. The primary aim of the scheme is to reduce tax evasion and ensure that subcontractors pay the appropriate amount of tax on their earnings.

At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

Under CIS, contractors are required to deduct money from a subcontractor’s payments and pass it to Her Majesty’s Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Here are some key features of the CIS:
1. Contractors are required to register with HMRC for the scheme, while subcontractors can choose to register to benefit from lower deduction rates.
2. Deductions are made at a fixed percentage rate, depending on the subcontractor’s registration status with HMRC. As of September 2021, the rates were:

20% for registered subcontractors
30% for unregistered subcontractors

1. The scheme applies to payments related to construction work, including labour, materials, and equipment.
2.Some businesses, such as property developers, may be considered contractors if they engage in construction activities.
3.There are specific rules and exemptions for deemed contractors, which include businesses that are not primarily in the construction industry but still spend a significant amount on construction operations.

Contractors must file monthly returns with HMRC, providing details of the deductions made from subcontractors’ payments. In addition, they must provide a statement to the subcontractor outlining the deductions made. The subcontractor can then use this information to claim the tax deductions when filing their annual Self Assessment tax return.

At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

The CIS is an HMRC scheme that applies when you are employed by contractors working in the field of construction. The CIS regulations mean contractors are generally legally required to withhold tax at 20% if they’re “registered” or 30% if they’re” not registered. This is distinct from self-employed persons who aren’t in the construction industry. They typically receive their earnings net, meaning that no tax is taken out.

The CIS includes more than you typically consider civil and building engineering work. It includes demolition repairs, clearing sites, decorating, as well as the installation of power systems. The HMRC describes the work that is covered in the Construction Industry Scheme.

Be aware that if your company provides construction industry-related services directly to homeowners (so not to contractors) This will not be covered by the CIS and the homeowner would be liable for the cost of your services upon receipt of your invoice.

Guidance note:  The tax amount that has to be paid by the contractor varies based on whether you are registered as a subcontractor in the CIS or not.

At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

Who Needs to Use CIS?

The Construction Industry Scheme (CIS) in the UK applies to businesses and individuals involved in the construction industry who are classified as either contractors or subcontractors.

Here’s a breakdown of who needs to use the CIS in the UK:

Contractors: A contractor is any business or other concern that pays subcontractors for construction work. This can include construction companies, building firms, and property developers, as well as government departments, local authorities, and other businesses that engage in construction activities. Even if a business is not primarily involved in the construction industry, it may still be considered a contractor if it spends a significant amount on construction operations.

Subcontractors: A subcontractor is any business or individual that carries out construction work for a contractor. This can include self-employed individuals, partnerships, or companies, as long as they are carrying out construction work. Subcontractors may offer their services directly to contractors or work as subcontractors for other subcontractors.

It’s worth noting that not all construction work falls within the scope of the CIS. For example, the scheme does not apply to work carried out by employees, work that is not related to the construction industry, or work that is carried out outside of the UK.

What is a CIS Tax Rebate?

In the UK’s Construction Industry Scheme (CIS), subcontractors often have tax deducted at rates of 20% or 30%, without the benefit of the personal tax-free allowance. This setup frequently leads to tax overpayment.

When you file your Self-Assessment Tax Return at the end of the year, your correct tax liability is recalculated, taking into account your income, expenses, and personal allowance. If you’ve overpaid, you may be eligible for a CIS Tax Refund.

Who can use this calculator?

Anyone working in the construction industry who has had CIS deductions can use this calculator to estimate their potential rebate. If you work in construction as a PAYE employee, Please contact  Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

What expenses can I claim?

You can typically claim expenses like tools, safety gear, and travel costs related to work. At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

Do I need receipts to claim expenses?

In many cases, you’ll need receipts to claim expenses. However, there are some instances where you may be able to claim without them. At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

How do I apply for a CIS tax rebate?

To apply for a CIS Tax Rebate, At Accountancy N Tax Services, Wallington can help you. Please call us on 020 7112 9098 or email us info@accountancyntax.co.uk.

We will complete a Self Assessment tax return.

How soon will I receive my rebate?

The time it takes to receive a rebate can vary, but it usually takes between a few weeks to a few months after you’ve submitted your claim.