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Allum Book-Keeping Services
33 Kestrel View

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0800 611 8172

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01305 701 234

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Construction Industry Scheme - Payroll Information from Allum Book-keeping Services

The Construction Industry Scheme (CIS) contains a set of specific rules governing the payment of subcontractors who work in the construction sector.

Contractors and the CIS

A contractor wanting to engage others to work for them, must determine if the work involved falls within the scope of the CIS. Working out whether or not the worker is employed or self-employed can be difficult, Allum Book-keeping Services will be able to assist you in deciding whether a subcontractor should correctly be classified as self-employed.

Contractors will need to do the following under the CIS:

  • Register for the scheme
  • Keep appropriate records
  • Issue payment statments to subcontractors
  • Verify subcontractors with HMRC to establish whether payments should be gross or net
  • Make the appropriate deductions
  • Submit monthly returns to HMRC, even where no payments are made

Subcontractors and the Construction Industry Scheme

Subcontractors working under the Construction Industry Scheme must register with HMRC before they start working and also to keep the authorities informed of any changes to the business - for example, the address, structure, partners or name of business.

Subcontractors that register for CIS will be set up to receive payments 'under deduction', which means that contractors will deduct 20% from most of the value of the invoices and pay the sum direct to HMRC. If the subcontractors is not registers under CIS they will have tax deducted at the higher rate of 30%.

Deductions will not be made for the following:

  • Materials
  • Manufacturing or prefabricating materials
  • Consumable stores
  • Construction Industry Training Board levy
  • VAT
  • Plant hire

A subcontractor can apply to be paid gross, with no deductions, if their business meets certain qualifying conditions.

We can update you on current regulations. For more help with your CIS needs, contact Allum Book-keeping Services today.

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