Construction Industry Scheme

Outsourcing your CIS payroll to the Business Bookkeeper.

Agency CIS payroll services

The Construction Industry Scheme (CIS) is a set of rules dictating how building contractors pay their sub-contractors.

When an invoice is issued by a sub-contractor, a deduction from that invoice is made with the difference being transferred to HMRC as advance payment towards the sub-contractor’s annual tax bill (except where HMRC have granted gross payment status to a sub-contractor).

Correct application of CIS is complicated because of the different rules on paying invoices depending on the type of business a subcontractor runs, specifically whether they operate as a sole trader (self-employed individual), partnership (unincorporated), limited company, or limited liability partnership (LLP).

The Business Bookkeeper has a decade of experience in managing CIS payroll accounts for contractors and sub-contractors.To find out more about our service, please call us on 020 3137 6565 or send us a message.

Female construction work using a tablet

Construction Industry Scheme for contractors

In addition to verifying that each sub-contractor you work with is on the scheme, we’ll calculate the necessary deductions you need to make from sub-contractors’ invoices and we’ll submit your CIS return by the 19th of each month letting you know how much you have to pay to HMRC. 

For contractors, the Business Bookkeeper CIS service includes the following: 

  • registration of your contractor status for the CIS scheme with HMRC.
     
  • verification of your new subcontractors with HMRC.
     
  • production of payment & deductions statements for your subcontractors on a monthly basis.
     
  • completion of your monthly CIS return and submission to HMRC.
     
  • help with general advice or queries about the CIS scheme. 

Construction Industry Scheme for sub-contractors

As a self-employed person, you must complete a Self Assessment form each year indicating to HMRC how much you’ve earned. When you register under the CIS, the tax-related deductions made on your invoice by your contractor or intermediary count as advanced payments for your overall tax bill during the year. 

Deductions are also made from invoices issued by partnerships (unincorporated), limited companies, or limited liability partnerships (LLP). Please ask us about how we assist you in these situations. 

For contractors, the Business Bookkeeper CIS service includes the following: 

  • submission of your Self Assessment tax return
     
  • provision of a set of annual accounts. 

Part of an overall bookkeeping service for your business

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We can provide our CIS payroll services as a standalone service or at a discounted rate if you choose to engage with the Business Bookkeeper on a monthly basis to keep your financial records up to date.

Let us take care of your bookkeeping, making sure that every invoice in and out of your business is correctly classified. Pick and choose the services you want for your business ranging from bank/sales and purchase ledger reconciliation, management reporting, VAT reconciliation and returns, maximising your tax deductions, and providing a year-end pack for your accountant.

To find out more, please call us on 020 3137 6565 or send us a message about working together.

Frequently Asked Questions

Construction Industry Scheme

The Construction Industry Scheme was introduced in 1971 to ensure that contractors and subcontractors in the building and construction trade paid the correct amount of tax.

If you carry out any of the following type of work or pay others to do this type of work for you, you have to register with the CIS: alterations, building repairs, building work, cleaning the inside of a building after construction work, decorations, demolition, dismantling, heating, lighting, power, water, and ventilation system installation, laying foundations, providing access works, and site preparation. 

Although CIS is primarily designed for construction-related businesses, companies which spend more than £1m a year for three consecutive years on construction must also register for the scheme as contractors and register the sub-contractors carrying out the work for them. 

There are some exemptions included in this FAQ section. 

You can register as a sub-contractor by clicking here or as a contractor by clicking here. If you qualify as both a contractor and sub-contractor, you must register at each link provided.

Alternatively, the Business Bookkeeper (when we’ve become your registered tax agent at HMRC) can do it for you.

Under the CIS, contractors will deduct money from the payments they make to subcontractors and pass that deduction along to HMRC. HMRC will consider the deduction as advanced payment towards the subcontractor’s National Insurance and Income Tax payments.

The deduction made is 20% – if a subcontractor is not registered with the CIS, then they must make a deduction of 30%. All contractors must identify the sub-contractors they use to HRMC.

For subcontractors, they must call HMRC on 0300 200 3210 or send notification in writing that they do not expect that they will be taking on any more subcontracting work. Please remember though that if you’re registered with HMRC as self-employed as well, your CIS deregistration will not deregister you from self-employment status in HMRC’s eyes at the same time.

You don’t need to register for CIS if you hire scaffolding (where you don’t provide labour), you are a surveyor, you’re delivering materials, you’re fitting carpets, or you’re an architect.
 
It also doesn’t apply if you’re a contractor and the job you’re on has been paid for by a head teacher or governing body of a maintained school on behalf of the local council, a trust, or a charity.

 

If you’re a subcontractor and you’re carrying out or paying for less than £1,000 worth of work (excluding material costs), CIS does not apply as long as your property is not for sale or rent.

The penalties for missed or late submissions are high. If your return is one day late the penalty is £100. If it is more than two months late, a further £200 is payable with further penalties being applied the longer it remains un-submitted.