13 Nov What Is Construction Industry Scheme?
Building homes and expanding infrastructure is a never-ending process. It’s one of the most sought-after industries in the UK. If you’re diving deep inside this booming industry then you have to keep yourself updated about certain incentives and schemes by the government.
If you are closely related to the construction industry and running a business or affiliated with the construction trade, you’re probably aware of the Construction Industry Scheme already.
To register for the CIS, stay aware of your tax standings. Some parts of the scheme may get tricky for you. Let’s see how CIS works. Also, figure out how to register for it.
What is the Construction Industry Scheme?
Before paying any money to your subcontractor, make sure you go through the guidelines first. But first, let’s talk about CIS. CIS is a scheme extended by HMRC for mainstream contractors and construction industry traders.
This scheme has guidelines and instructions for contractors. Because HMRC requires you to register before the payment.
This mechanism actually works for you to make things easy for you. But how? As a contractor, pay any deducted payments from the subcontractor’s amount to pay HMRC.
The construction industry is diverse. You can find multiple areas under this domain. People building homes directly come under CIS, but in parallel, if you are affiliated with any related area under it then CIS is for you too.
Some important areas under CIS include site preparation, dismantling, alterations, repairs, decoration, demolition etc. The CIS applies for construction industry-related fields across the board. People who are self-employed or in partnership but involved in the construction industry can benefit from CIS.
How you can register for CIS?
Construction contractors should register first. But if you are a subcontractor, it is better that you do it even if you rule out the option of higher deductions.
If you are not planning on paying your contractor any time soon, then you can go about your daily business as usual. Registration should be before paying your subcontractor. It doesn’t matter if you are paying your subcontractor in gross terms or net. But you wouldn’t want any hiccups, do you? So, register yourself to save yourself from an eleventh-hour rush.
The process of registration should be a cakewalk for you, just register as a contractor by setting up an employer account. You will be set up nicely by HMRC and they will gear you up with the contractor scheme and other mandatory information.
What if you are a sole trader?
Just register yourself before starting a business. If you are a sole trader, that means you have a Unique Transaction Reference (UTR) number already. Just go to their webpage and do it online. You will be needing a government gateway ID and password to access this service. Just create the login account when you register, if you haven’t any.
Notify your contractors to pay you
If you are having trouble in receivables, there is a system in place to notify your contractors to pay you in full. You have to apply for gross payment status. Your contractors will be notified to pay you without deduction. If you go with this option, you will have to pay your and NI at tax year’s end.
What if you don’t have a UTR?
You have to register for the self-assessment as a new established business and CIS if you don’t have a UTR. Working from the thousands of miles away doesn’t exclude you from registering either. You will have to register for CIS also if you are working from abroad for the contractor working in the UK.
After registration, the tax body will inform you about it and intimate you about the information that’s shared with your contractor.
Keep it simple
Just to keep your affairs sharp and accounts clean, we suggest that you should register with HMRC and file monthly returns. This is important for you as a contractor under CIS. If you are having trouble then it is better that you contact specialists. We provide related assistance that helps you set you up with all CIS requirements to make sure that you are compliant in every way.