Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and send them to HMRC.
These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Your business becomes a subcontractor if you carry out construction work for a contractor.
If your business falls under the subcontractor bracket, then we recommend that you register your business as a CIS subcontractor with HMRC.
While contractors must register for the scheme, contractors are not legally obliged to do so (unless you fall under both categories, in which case you must register as both). It is important to note that tax deductions will be taken at a larger rate if you fail to register, meaning that doing so is financially beneficial for your business.
For reference, tax is deducted at 20% for registered CIS subcontractors and 33% tax for unregistered subcontractors.
Subcontractors must determine who exactly their contract is with, in order to avoid any confusion.
For example, when it comes to construction of private households. Private households do not count as contractors, since they are not businesses, so they do not fall under CIS. The only way construction on a private household would fall under CIS is if you are doing this for a business external to the homeowner.
CIS covers most construction work to: a permanent or temporary building or structure; or a civil engineering work like roads and bridges.
For the purpose of CIS, construction work includes: preparing the site, e.g. laying foundations and providing access works; demolition and dismantling; building work; alterations, repairs and decorating; installing systems for heating, lighting, power, water and ventilation; and cleaning the inside of buildings after construction work.
Exceptions/ jobs for which you do not have to register: architecture and surveying; scaffolding hire (with no labour); carpet fitting; making materials used in construction including plant and machinery; delivering materials; and work on construction sites that’s clearly not construction, e.g. running a canteen or site facilities.
Browse the CIS guide for contractors and subcontractors for more information on what is or isn’t covered by the scheme.
Registering is straightforward and easy to do and there are various avenues for your convenience!
The easiest and quickest way to register as a CIS subcontractor is to do so online.
Simply use your government gateway ID to log on HMRC online services, then click ‘add services’ and it will allow you to register as a subcontractor.
If you have not used this platform before then you can register for HMRC online services in order to complete the above action.
To apply by post, simply print and fill out the relevant form from the government website, before sending it off to HMRC.
For individuals, registering using form CIS 301
For partnerships, register using form CIS 304
For limited companies, register using form CIS 305
If the above options do not suit, then you can also register over the telephone. In order to do this, you need to call the HMRC CIS Registration phone line on 0300 200 3210.
If you are struggling with this process and require any kind of assistance, then our team of accountants will always be happy to guide you through the process.
We can take complete control of this process for new and existing clients at no extra charge!
Simply call us on 01254 589799, or drop us an email on firstname.lastname@example.org