If you work for a contractor in the construction industry as a self-employed individual, under the CIS, the contractor is obliged to withhold tax on its payments to you.
Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HMRC.
Registered CIS workers receive their payments net of 20% tax. If a subcontractor is unregistered, they will receive their payment net of 30% tax. Expenses wholly and exclusively used for your business can be set against your income and as a consequence many people under CIS overpay tax and need to claim a refund.
This is different from other self-employed individuals, who normally receive their payments gross.
The construction Industry Scheme covers more than you might expect in terms of building and civil engineering work. This includes repairs and decorating, demolition, site clearing, and installing power systems.
For the purpose of CIS, construction work includes:
- a permanent or temporary building or structure
- civil engineering work like roads and bridges
- 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
Due to the tax implications of this scheme, many employees in the construction industry are overpaying and may be entitled to a tax refund. This is where we can help.
Services we provide for subcontractors:
- Determine your status as a subcontractor or employee and register you with HMRC accordingly
- Manage and organise your business records
- Assist in preparing self assessment tax return and calculate your tax refund (where applicable)
Many accountants will charge a fee as a percentage of your refund, but here at Aston Shaw, we charge a fixed fee in completing your Self Assessment Tax Return and claiming any refund due.
For any enquiries relating to the Construction Industry Scheme or to find out more, please contact us and one of our friendly specialists will be in touch.
