CIS For Contractors (Employers)
On this page you will find information about:
CIS Contractor Helpful Information
If you or your business operates as a contractor under the Construction Industry Scheme (CIS), you need to register for CIS before you take on any subcontractors. You must check that they should be working as a subcontractor and not an employee. Businesses can be fined for getting this distinction wrong.
You also need to verify the status of your subcontractors as either registered for CIS, not registered for CIS or if they have ‘gross payment status’. This determines the rate your deduct from their gross monthly pay:
- Registered for CIS – 20% deduction
- Not registered for CIS – 30% deduction
- Gross payment status – 0% deduction
Gross payment status doesn’t mean that they are exempt from paying National Insurance and income tax. It means that they will pay it at the end of the financial year, instead of monthly.
The calculation is worked out excluding the costs of materials, consumables, plant hire, fuel and VAT. All the deductions you take from subcontractors pay must be paid directly to HMRC every quarter.
You must also:
- make these payments in the same way as you pay PAYE and Class 1 National Insurance for your existing employees.
- provide a monthly return to HMRC with details of all the payments you have made to CIS subcontractors.
- keep full records of these payments, including any deductions and VAT.
Warning: There are substantial fines for missing your monthly return deadlines, incorrect paperwork and late payments.
CIS Contractor Payments
It is now mandatory to file your CIS returns online. To do this you need to register with HMRC’s CIS online service. This is free to use and each step is explained clearly, with all the information you need to complete the form listed at the beginning. However, you may prefer to use commercially available CIS software. Details of both these methods are available from HMRC.
For further Tax information, please follow the links below: