What is CIS?

Intro

The Construction Industry Scheme (CIS) is a tax deduction scheme that regulates the payment of taxes for construction work in the UK. It is a mandatory scheme for contractors and subcontractors who engage in construction work, including building, altering, repairing, or demolishing buildings, roads, or other infrastructure, as well as installing or maintaining systems.

Registration and Eligibility

To comply with the CIS, contractors and subcontractors must register with HM Revenue and Customs (HMRC) if they engage in construction work or are self-employed. This includes businesses based outside the UK that engage in construction work as a contractor or subcontractor in the UK.

Work Coverage

The CIS covers most construction work, including:

• Building
• Altering
• Repairing
• Demolishing
• Installing
• Maintaining systems, such as electrical systems and plumbing systems

Exceptions

Certain jobs are exempt from the CIS, including those that are not considered construction work. It is essential to understand what work is covered and what is exempt to ensure compliance with the scheme.

International Businesses

Businesses based outside the UK must also register and pay tax if they engage in construction work as a contractor or subcontractor in the UK.

Key Requirements

To comply with the CIS, contractors and subcontractors must:

• Register with HMRC
• Verify their subcontractors
• Make tax deductions from payments to subcontractors
• Pay the deducted tax to HMRC
• File returns with HMRC

Sign-in Process

To access the CIS online service, contractors and subcontractors must sign in using their Government Gateway user ID and password. They must also add CIS to their business tax account. If issues arise during the sign-in process, technical support is available to troubleshoot and resolve problems.

Tax Deductions and Payments

The CIS requires contractors to make tax deductions from payments to subcontractors. The deducted tax must be paid to HMRC, and returns must be filed with HMRC. The scheme also allows for exceptions to the deductions, such as setting off deductions against other taxes owed.

Conclusion

The Construction Industry Scheme (CIS) is a critical tax deduction scheme for contractors and subcontractors in the UK. Understanding the scheme's requirements, including registration, work coverage, exceptions, and key requirements, is essential for compliance and avoiding penalties. By following the guidelines outlined in this article, contractors and subcontractors can ensure they meet their obligations under the CIS.