If you work in the Construction Industry you may be a:
• Or both
Contractors and Subcontractors can be self-employed individuals, partnerships or companies. The Construction Industry Scheme CIS, sets out the rules for how contractors make payments to subcontractors for construction work.
Work covered by CIS
CIS covers most construction work to:
• a permanent or temporary building or structure
• civil engineering work like roads and bridges
For the purpose of CIS, construction work includes:
• preparing the site, e.g. laying foundations and providing access works
• demolition and dismantling
• building work
• alterations, repairs and decorating
• installing systems for heating, lighting, power, water and ventilation
• cleaning the inside of buildings after construction work
To check if the work you are doing is covered by the CIS there is more guidance in the CIS 340
Actions for Contractors
• You need to check whether your contracts create employment or Self-Employment
• When you have subcontractors you need to register as a contractor. If you already have employees HMRC will change your existing PAYE Scheme to a PAYE/CIS Scheme.
• Before you pay a subcontractor they need to be verified. You can do this by using the free HMRC online service or commercial cis software.
• Make deductions and pay subcontractors, HMRC will tell you how much to deduct when you verify them. You will need to give your subcontractor a payment and deduction certificate if you’ve made a deduction from their payment
• You should make one payment to HMRC to cover PAYE Tax, National Insurance and CIS deductions by the 22nd if paying electronically or the 19th if paying by post.
• Tell HMRC of these payments on a monthly return , you can file a return using HMRC CIS online service or using commercial CIS software. File the return by the 19th of each month.
• Keep good records for 3 years after the end of the tax year of the gross amount of each payment invoiced by subcontractors, excluding VAT. Any deductions you’ve made from subcontractor payments, including records of costs of materials the subcontractor invoiced you for, excluding VAT.
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