CIS
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The Construction Industry Scheme sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry and certain other businesses.
Under the Scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status as determined by HM Revenue & Customs. This may require the contractor to make a deduction, which they then pay to HMRC from that part of the payment that does not represent the cost of materials incurred by the subcontractor.
From 6 April 2007 a New Construction Industry Scheme was started.
Online Filing Services
to reduce the regulatory burden of the Scheme on construction businesses
to improve the level of compliance by construction businesses with their tax obligations
to help construction businesses to get the employment status of their workers right
Commencement date
The commencement date for the new Construction Industry Scheme was 6 April 2007. The deduction rates for the new scheme are 20% for subcontractors registered with HMRC for payment under deduction and 30% for those not registered.
No. There are no registration cards, tax certificates or vouchers in new CIS.
Instead you will receive a unique taxpayer reference number that will identify you on the HMRC system. You will need to give this, with your name and National Insurance number (if known), to your contractor(s). Factsheet CIS344, Getting paid by a contractor – advice for subcontractors tells you more about this.
Vouchers are replaced by a monthly return which only contractors need to complete. Factsheet CIS346, The monthly return – advice for contractors tells you more about this.
If you are being paid ‘under deduction’, your contractor must give you a written or faxed payment statement (which may also be given electronically where you have agreed to this method) showing how much you have been paid and the deductions that have been made from your payments.
Your contractor will give you a payment statement for each tax month or may choose to give you one with each payment where these are more frequent.
If you had a tax certificate CIS5 or CIS5(Partner) or CIS6 at the start of new CIS, you will keep gross payment status only where your certificate was due to expire on or after 04/2007. Otherwise, you will only be registered for payment under deduction and a fresh application is needed if you want to be paid gross under new CIS.
To register for new CIS you should
phone the CIS Helpline on 0845 366 7899, or
visit www.hmrc.gov.uk/new-cis if you are not registering for gross payment, or
contact us at Tax Soft if you would like our help.
If HMRC don’t already know about you, that is if you have not been paying tax or National Insurance contributions before, they will ask you to go to a local HM Revenue & Customs office for an identity check.
If you are asked to go to a local HM Revenue & Customs office, you should take with you at least two original documents showing your identity. Examples of suitable documents (not photocopies) for this purpose include
your birth certificate
any letters you may have from the Department for Work and Pensions (DWP) showing your National Insurance number (NINO)
a utility bill, such as gas, electricity or telephone showing your current address
council tax bills showing your current address
a passport
a driving licence
I want to be paid gross and not have deductions taken from my payments
To be paid gross by contractors you work for, you need to apply to HM Revenue & Customs and pass the tests set by law that show you are running a proper business. Factsheet CIS343 ‘ Applying to be paid gross – advice for subcontractors’ tells you more about this.
Being paid ‘under deduction’
After you have registered for new CIS and all checks have been made, if you then want to be paid under deduction, on account of your eventual tax and Class 4 National Insurance bill, you do not need to take any further action.
If you work in the construction industry as a self-employed subcontractor and you are not registered , your contractor will be told this when they contact HMRC to check or ‘verify’ your payment status.
If you are not registered, or you have not given your contractor the right information so that HMRC can match you on our system, then a higher-rate deduction will be made from your payments.
If this happens to you, please contact HMRC or us to register and to arrange for these higher-rate deductions to be set against your eventual tax and Class 4 National Insurance bill.