How do I register for the Construction Industry Scheme?
If you work as a subcontractor in the construction industry, you should register with HMRC for the Construction Industry Scheme (CIS).
Registering with HMRC:
You can register under your own name or a business name (‘trading name’).
It is important to register as soon as possible to make sure you are deducting the correct amount of tax.
HMRC will let you know that you are registered and will send your Unique Taxpayer Reference number (UTR) in the post.
How much tax do I pay under CIS?
When you are registered as a CIS subcontractor, your contractor will deduct 20% tax from certain payments made to you. The tax is paid directly to HMRC. This is called ‘payment under deduction’.
If you do not register as a CIS subcontractor, your contractor will deduct tax at 30% of all your payments. The tax deducted from payments you receive as a registered CIS subcontractor is then used to contribute to your annual tax and National Insurance payments.
Do I have to get tax deducted by my contractor?
This is usually only available to certain businesses, you must have a turnover of at least £30,000 as a sole trader. If you are in a partnership, there must be £30,000 per partner or £100,000 for the company as a whole. The same figures apply if you have company directors. Other rules also apply and are called the ‘compliance test’.
If you receive gross payments instead of payments under deduction you will need to pay your tax and National Insurance in full at the end of each tax year. You declare this income either on your Corporation Tax return, if you are a limited company; or on your self assessment tax return, if you are a sole trader or partnership.
Do I have to pay National Insurance Contributions?
As a CIS subcontractor you will have to pay Class 2 and Class 4 National Insurance where required:
- Class 2 National Insurance is currently payable at £2.95 per week. You may be exempt if your annual income is under £6,205.
- Class 4 National Insurance contributions are payable currently at 9% of your taxable profits between £8,424 and £46,350. An additional 2% is charged on any profits over £46,350.
When do I pay National Insurance Contributions:
- Class 4 National Insurance contributions are generally paid at the same time as any income tax. The amount of class 4 National Insurance Contributions due is worked out when completing your Self Assessment Tax Return.
- Class 2 National Insurance is usually paid by direct debit on a monthly basis.
Do I have to fill in a Self Assessment Tax Return?
A Self Assessment Tax Return must be completed for any tax year in which you have had self employment income.
When you have registered as a CIS subcontractor, HMRC will request that you complete a Self Assessment Tax Return for each tax year in which you have had self employment income. A Self Assessment Tax Return will have to be completed regardless of how much CIS self employment income you have had in any one tax year.
How do I fill in a Self Assessment Tax Return?
You can complete your Self Assessment Tax Return either online or on a paper tax return. The filing deadline for submitting online is midnight on the 31st January and the midnight 31st October for a paper return.
What happens if my Self Assessment Tax Return is late?
If you do not submit your Self Assessment Tax Return on time you will be issued a penalty by HMRC. It is important to submit your Tax Return on time to avoid a late filing penalty from HMRC.
How do I get a CIS Tax Refund?
Many CIS Sub Contractors are entitled to a CIS tax refund at the end of each tax year. You can only receive a CIS tax refund after you have completed your Self Assessment Tax Return. For more information see: CIS Tax Refunds.
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?
Construction Industry Scheme includes:
CIS For Subcontractors
CIS For Contractors (Employers)
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?