WHAT IS THE CONSTRUCTION INDUSTRY SCHEME (CIS)?
The CIS (Construction Industry Scheme) is a tax regime that HMRC set up to cater for self-employment in the construction industry. Tax is deducted at either a higher (30%), net (20%) or gross level depending on the status of the subcontractor’s UTR number.
CIS tax deduction rates are as follows:
‘Net’ deduction (20%) – a flat rate of 20% is the standard deduction for subcontractors who have registered their UTR number under the CIS
Higher deduction payment (30%) – Deductions at the higher rate of 30% may be taken if the UTR number you’ve provided to the contractor is either incorrect or has not been registered. If you are having problems with your UTR number being verified by contractors you should contact the CIS office for assistance.
Gross payment (0%) – If you have been granted gross payment status by HMRC there will be no deductions made on your payment.
As is compulsory with self-employment, a self-assessment tax return is then completed at year-end, at which point your tax and national insurance bill for the year is calculated. Any CIS deductions suffered will be offset against your final tax bill.
When completing your tax return you will be able to offset any expenses incurred throughout the year against your income for tax purposes. Any overpaid tax will be reimbursed to you by HMRC.
WHAT ARE THE BENEFITS?
Bishopsgate specialise in the processing of payments to self-employed operatives and short term contract employees.
Benefits of Bishopsgate CIS for Subcontractors:
- You are in business on your own account and can decide which jobs to take on and how often to work
- Ability to offset your business expenses against your tax bill through a yearly tax return
- Reduced payment terms and faster payments compared to contracting directly with an end client
- Reduced administration as Bishopsgate takes care of invoicing, payment and issuing remittance advice.
- Public liability and personal accident cover provided
- Access to both health and safety advice
- Weekly remittance advice
Benefits of Bishopsgate CIS for Agencies/Clients:
- Assurance that all compliance measures are taken and subcontractors are genuinely self-employed
- Comprehensive insurance cover for the subcontractors supplied to end clients
- Reduced time and costs spent on internal administration
- Confidence that subcontractors are paid correctly and on time
- Ability to supply the best tradesmen
- Flexibility of workforce
- UK based call centre
- Access to online client portal
- Candidate SMS payment alerts
- Dedicated Account Manager
- Rebate Scheme (subject to qualification)
- Competitive industry rates
WHAT WORK IS COVERED BY CIS?
The CIS covers all types of construction work carried out in the UK including territorial waters up to a 12-mile limit.
This includes site preparation, alterations, dismantling construction, repairs, construction, repairs, decorating and demolition.
Being self-employed in 2017
With the introduction of the onshore employment intermediaries legislation in 2014 and the reporting requirements that followed, there is even more scrutiny being placed on self-employed engagements. With HMRC campaigning against false self-employment, they have put the onus on agencies to prove the self-employed status of a subcontractor.
When you contract with Bishopsgate, we ensure all the necessary due diligence is carried out to certify the self-employed status of a subcontractor; from upper chain contract reviews to control tests. For more information on how Bishopsgate safeguard your interests in this area of compliance, please get in touch with us.
REGISTER FOR BISHOPSGATE CIS SERVICE
If you are going to begin trading as a sole trader, you will need to register as self-employed with HMRC, in order to receive your Unique Taxpayer Reference (UTR) number. You can do this online through the Gov.uk website, or by calling 0300 200 3500.
Once you have registered for self-employment and received your UTR number, you need to register this on the CIS scheme, by calling the CIS office on 0300 200 3210. If you do not register your UTR you will have tax deducted at the higher rate of 30% on all payments made to you.
To complete your registration with Bishopsgate, we will also request your proof of eligibility to work in the UK as well as a signed contract. After this is completed, you will be ready to get paid.