The Construction Industry Scheme, or CIS for short, establishes the rules for how construction industry contractors must pay subcontractors for their work.
Anew campaign is aiming to address the matter by providing Construction Industry Scheme (CIS) workers detailed guidance on tax and expenses concerns. All of these payments must take account of the subcontractor’s tax status, which may require the contractor to make deduction from parts of the payment that does not represent the cost of subcontractor-supplied materials and remit those deductions to HM Revenue and Customs (HMRC).
These deductions are treated as advance payments towards the subcontractor’s National Insurance and tax.
Contractors are required to register for the construction industry scheme. Although subcontractors do not have to register, the deductions from their payments are higher if they are not registered. Contractors who are registered can log into the CIS online portal to verify a subcontractor or file their monthly returns.
What is a Contractor or Subcontractor?
For construction industry scheme purposes, a company or individual is a contractor if:
- They hire and pay subcontractors for construction jobs
- Their business doesn’t perform construction jobs but spends over £1 million a year on construction work in any three-year period
A company or individual is a subcontractor if they do construction work as a contractor/