What is the Construction Industry Scheme (CIS)?

One of the groups of people we can help with tax refunds is those working in the construction industry that comes under the Construction Industry Scheme or CIS.  Construction tax claims can be made for contractors or subcontractors who come under the CIS – but what is it?

Subcontractor tax

Under the CIS, contractors who have subcontractors working for them will deduct money from the payments that they make to them and pass this to HMRC.  The idea of this is that the payments go towards tax and National Insurance in a similar way that PAYE collects these payments from people who are employed.

Contractors need to register for the scheme in order for it to apply but the subcontractors don’t need to register.  It is beneficial to do this though, as the tax rate will be taken at a lower rate for subcontractors who are registered compared to those who don’t.

Who is a subcontractor?

So how do you know if you are classed as a subcontractor?  Or if you are the contractor and you need to register for the CIS?

You are classed as a contractor if you either pay subcontractors to do construction work or if your business isn’t in construction, but you spend an average of £1 million or more a year in any 3 year period.  You are classed as a subcontractor if you do any construction work for a contractor.  If you do both, then you need to register with the CIS as both.

What kind of work comes under CIS?

The CIS refers mostly to construction work which can be anything from working on permanent or temporary buildings or structures through to civil engineering work on things like bridges and roads.  The CIS also lists construction work as:

• Site preparation such as laying foundations and adding access works
• Demolition and dismantling of buildings or other types of construction
• General building work including alterations, repairs and decorating
• Installing systems such as heating, air conditioning, lighting, electricity and water
• Cleaning the interior of a building after construction work has finished

You can be involved with the construction industry but not come under the CIS because there are some exceptions.  Examples of these include if you were running a canteen on a large construction site – you wouldn’t come under CIS because you aren’t doing construction work.  architects and surveyors are also exempt from the scheme.

Should your business be located outside the UK, but you do work as a contractor or subcontractor inside the UK, you will still come under the CIS and need to register for it to make sure you make any payments due.

Tax refunds for CIS workers

If you are in the Maidstone area and you come under the Construction Industry Scheme, then we can help you to see if you are due a tax rebate.  This means if you work in the industry then you might be entitled to a refund for travelling costs and even abuilders tax refund for the costs of travelling to the various work locations.