Construction Industry Scheme
MHC & CO
The Construction Industry Scheme (CIS) is a tax deduction scheme implemented by HMRC in the UK. If you're involved in construction work, understanding CIS is crucial to ensure smooth operation and avoid any tax-related issues.
Contractors
-
You are responsible for deducting a percentage (either 20% or 30%) from subcontractors' payments.
-
This deduction is considered an advance payment towards their income tax and National Insurance contributions.
-
You must register with HMRC for CIS before hiring subcontractors.
-
You need to verify the subcontractor's registration status with HMRC before making payments.
-
Report deducted tax to HMRC through monthly returns.
Subcontractors
-
You may be registered with CIS, allowing you to receive payments without tax deduction at a higher rate (20%).
-
If not registered, contractors will deduct a higher percentage (30%) from your payments.
-
Registering with CIS allows you to reclaim deducted tax through your Self Assessment tax return.
-
Keep accurate records of all your construction work and payments received.
Benefits of CIS Registration (for Subcontractors)
-
Receive gross payment without tax deduction (at 20%).
-
Easier to manage your finances and cash flow.
-
May access certain contractual opportunities that require CIS registration.
Advises
-
Don't face business closure alone. Contact MHC & CO today for a free consultation on company liquidation.
-
Explore Your Options! Discuss your specific situation and let our experts guide you through the liquidation process.
-
Get a Free Quote! Receive a personalized proposal for our liquidation services tailored to your company's needs.
-
Ignorance of CIS regulations can lead to penalties for both contractors and subcontractors.
-
HMRC provides resources and guidance on CIS.
-
Consider seeking professional advice from an accountant if you have complex CIS queries.