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

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