What is the Construction Industry Scheme?
The Construction Industry Scheme (CIS) is a set of government regulations that control subcontractors’ tax payments. You need to know how it affects you if you work as a subcontractor, or if you run a business that employs subcontractors.
To find out more about the Construction Industry Scheme please follow the links below:
You must register for the CIS if you are a contractor that hires subcontractors to undertake construction works.
You are classed as a CIS subcontractor if you do work for a CIS contractor
Does the CIS apply to a homeowner that’s making their own building improvements?
The Construction Industry Scheme applies to many, specific types of individuals and businesses that work in construction. This ranges from builders to housing agencies and even includes businesses who spend more than £1m on construction over a three year period, even when they are not construction businesses. It involves contractors and subcontractors, but not usually private individuals carrying out their own home improvements.
What has the CIS got to do with tax?
HMRC introduced the CIS because they felt that, because they are not classified as employees, they were losing out on some income tax payments from subcontractors in the construction industry. Now, a CIS contractor pays a portion of their subcontractors’ wages directly to HMRC before it reaches the subcontractors. Effectively, the CIS contractor acts as a tax collector for HMRC, they become part of the administrative process. These payments are then put towards subcontractors’ income tax and National Insurance payments. CIS subcontractors see this deduction on their payslip and include the figures on their self assessment tax return.
As a subcontractor, could I pay too much through CIS?
It is possible to pay too much tax and National Insurance as a subcontractor through CIS. HMRC have a system in place for claiming a CIS refund and they will repay your overspend. You claim through the self assessment process and can include any other applicable tax reliefs at the same time. If you think you might be owed a CIS tax refund, you can use our free CIS Tax Refund calculator to see how much its worth.
For further Tax information, please follow the links below:
Income Tax includes:
What is income tax?
How is Income Tax calculated?
How much income tax do I need to pay?
Income Tax Allowances
Income Tax Rates and Taxable Bands
How do I pay income tax?
Tax Codes includes:
Where do I find my Tax Code?
New Tax Codes
What does my tax code mean?
Different Tax Codes
More than one job
Emergency Tax Codes
Emergency Tax Codes includes:
What is an Emergency Tax Code?
What does an emergency Tax Code look like?
Why do I have a BR/ Emergency Tax Code?
Can I get a Tax Refund if I have paid Emergency Tax?
VAT (Value Added Tax) includes:
What is VAT?
When do I pay VAT?
How much VAT do I need to pay?
Do I need to register for VAT?
How do I pay VAT?
Can I claim VAT back?
Self Assessment includes:
What is Self Assessment?
Do I need to complete a Self Assessment tax return?
How do I get a Self Assessment tax return form?
How do I register for Self Assessment?
Can I register for Self Assessment on behalf of a company or trust?
What is a Unique Tax Reference number (UTR)?
How do I get a Unique Tax Reference (UTR) number?
How do I complete my Self Assessment tax return online?
Can I complete my Self Assessment tax return on paper?
Self Assessment Tax return deadlines
What if I submit my tax return late?
What if I submit my tax return incorrectly?
How is my tax calculated?
Do I need to check my tax calculation?
National Insurance includes:
What is National Insurance?
What are the different types of National Insurance?
Who pays National Insurance?
What is National Insurance used for?
Do your National Insurance payments affect your Pension and Benefits?
How much National Insurance should I pay?
Pension Tax includes:
Do I have to pay tax on my pension?
Do I have to pay tax on my state pension?
Corporation Tax includes:
Who needs to pay Corporation Tax?
How much Corporation Tax do I need to pay?
How do I pay Corporation Tax?
Inheritance Tax includes:
What is Inheritance Tax?
Capital Gains Tax includes:
What is Capital Gains Tax?