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Introduction to the Construction Industry Scheme

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/

 

Structural Defects Insurance

What Work is Covered By the Construction Industry Scheme?

The scheme covers most forms of construction work done to a:

  • Temporary or permanent structure or building
  • Bridges, roads, and other types of civil engineering projects

CIS considers the following tasks to be ‘construction work’:

  • Preparing the site, such as preparing access works and laying foundations
  • Dismantling and demolition
  • Building activities
  • Decorating, alterations, and repairs
  • Installation of ventilation, water, power, heating, and lighting systems
  • Cleaning builder materials after construction work

Those who only do certain jobs are not required to register. These jobs include:

  • Architecture
  • Surveying
  • Delivering materials
  • Carpet fitting
  • Scaffolding hire
  • Non-construction work on sites, such as working in site facilities or managing a canteen

These CIS rules apply for businesses based outside the UK if they do construction work as a subcontractor or contractor in the country.

Specialists in Construction Insurance

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