CIS Accounting
Construction industry specific compliance
If you’re involved in the construction industry, you’re likely familiar with the challenges of navigating HMRC and the complexities of the Construction Industry Scheme (CIS). The CIS also encompasses civil engineering tasks, such as demolition and site clearance, integral to the construction sector.
Self-employed sole traders and subcontractors often encounter difficulties with tax deductions under this scheme, as contractors are required to deduct money from their payments. The personal allowance can affect these deductions, potentially leading to overpayment of taxes.
It’s crucial to understand your employment rights and responsibilities as a self-employed individual under the CIS for compliance and financial planning, including knowing the deduction rates applied to your gross income. Completing a self-assessment tax return is vital to ensure all income and expenses are accurately reported. We can support you with all of this.
We can assist with the annual compliance requirements and handle any enquiries from the Inland Revenue regarding CIS accounting with confidence. These deductions are considered an advance payment towards your income tax and National Insurance contributions. Contractors must deduct a portion of the subcontractor’s payments for tax and National Insurance contributions before passing the money to HM Revenue and Customs (HMRC).
This ensures that subcontractors meet their obligation to pay tax under the CIS. The scheme applies to all construction work as defined by HMRC, including projects undertaken by businesses based outside the UK. It’s important to note that tool hire expenses are excluded from tax deductions under the CIS.
To qualify for gross payment status, HMRC requires compliance with three tests assessing turnover and ownership structure. Registering for the CIS is crucial for both contractors and subcontractors to ensure compliance with tax regulations and benefit from lower tax deduction rates for registered subcontractors.
Read more about CIS
VAT rates in the construction industry
VAT rates in the construction industry can be 20%, 5% or 0%. Learn how each applies to keep your projects compliant and efficient.
CIS compliance: A practical guide for contractors and subcontractors
Stay compliant with the Construction Industry Scheme (CIS). Learn your responsibilities, avoid penalties, and streamline tax deductions in our CIS compliance blog.
The importance of accurate record keeping for CIS tax deductions
Because of CIS tax deductions, contractors have extra responsibilities and can get in trouble if everything’s not in order. The solution? Accurate record keeping.
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Let’s talk today
Our tax experts will be happy to have an exploratory conversation, free of charge, so that you can discover for yourself what make Coveney Nicholls the intelligent choice for businesses and individuals in need of tax advice.
