How can a CIS-Specialised
Accountant help me?
What information do you need to know?
As a subcontractor, registering for CIS can increase your cash flow and provide many other benefits because it deducts tax at source. Meaning, the contractor already pays it on your behalf.
The deductions serve as advance payments toward the subcontractor’s tax and National Insurance liabilities due at the end of the tax year.
This avoids a one-off balloon payment being due at the end of each year. It also means that you only have the remaining balance to settle, if any.
If you are a contractor, you must register under CIS. You qualify as a contractor if you pay subcontractors for labor related to construction work.
So, what is CIS?
CIS stands for Construction Industry Scheme. Under the scheme, there are contractors and subcontractors.
Contractors deduct a portion of the money from a subcontractor payment to then pay to HMRC. This can be deducted at 0%, 20%, and 30% depending on the sub-contractor.
The way to find out how much CIS Accountants tax you need to deduct from each subcontractor, is by verifying them through the HMRC website or your preferred accounting software.
To be able to verify a subcontractor, the minimum information required is their trading name & their UTR in which they verified themselves with HMRC.
A 0% deduction means the subcontractor has registered for Gross Status, where contractors cannot deduct CIS tax from them.
20% deduction means the subcontractor is registered at the standard deduction rate per HMRC.
30% deductions mean that the subcontractor has not yet verified themselves with HMRC, and therefore remains unrecognized and appears as an unknown subcontractor within the Construction Industry Scheme.
CIS deductible means you are a contractor and must pay the tax element that you have deducted for the payment to the sub-contractor.
CIS Suffered means you are the sub-contractor and you have received a payment net of any deductions.
When, And How Often To Submit Your CIS?
CIS submissions are to be sent to HMRC monthly.
CIS returns for CIS stopped and EPS submissions for CIS suffered are due to HMRC by the 19th of every month.
The period you are reporting for will be the 6th of the month to the 5th of the next month.
For example, if you report CIS figures for the period from April 6 to May 5, you must submit them and make any payment by May 19.
Does Your CIS Affect Your PAYE Due?
Your CIS doesn’t directly affect your PAYE. However, it does affect how much you pay.
If you withhold CIS from your subcontractors, you must pay this amount to HMRC monthly and can add it to your due PAYE figure.
Also, if you suffer CIS, you can deduct the amount suffered for the month from your original PAYE due for that month.
As both contractor and subcontractor, add stopped CIS to PAYE, subtract suffered CIS, and pay the difference.
If you suffered CIS exceeding your stopped CIS plus PAYE, you’ll have a credit and owe nothing for that period. You can find more information about paying CIS or PAYE with HMRC at www.gov.uk/pay-paye-tax.
Do You Have To Be Registered For CIS?
Contractors must register under the CIS scheme; subcontractors need not. However, this is when you will face a 30% deduction from the payment owed to you.
You needn’t register under the CIS scheme if unrelated to the construction industry.
You can find more information on this topic at the government website: www.gov.uk/what-is-the-construction-industry-scheme.
At Northern Accountants, we have a specialist team of CIS accounting experts based in our Leeds and Hull offices. If you need help with your accounts or business support, don’t hesitate to reach out.
We also have an article on 5 Benefits Of Using Xero For CIS!
