What is a CIS Return?
What is the Construction Industry Scheme (CIS)?
The CIS is an HMRC program that applies if you work for a contractor in the construction business as a self-employed individual rather than as an employee. According to CIS laws, the contractor is normally required to deduct tax from your payments, at a rate of either 20% if you are “registered” or 30% if you are not.
Other self-employed individuals who are not in the construction business, on the other hand, usually receive their payments gross, meaning no tax is withheld.
The CIS Return encompasses work such as demolition, site clearance, repairs and decorating, and power system installation, in addition to what you might think of as normal building and civil engineering work. The HMRC CIS Handbook explains what types of work are covered under the Construction Industry Scheme.
Note that if you provide construction industry services directly to a homeowner (rather than a contractor), you will not be covered by the CIS, and the consumer will pay you gross on invoice production.
Whether you register as a subcontractor under the CIS Return determines the amount of tax that must be deducted by the contractor.
What is a CIS Monthly Return?
The Building Industry Scheme aids in the regulation of payments made by construction contractors to subcontractors who perform work on their behalf. Each month, they must submit a CIS return to HMRC to let them know who has been paid and how much.
Who should participate in CIS?
HMRC requires a contractor that hires subcontractors to complete construction work to register for the Construction Industry Scheme (CIS). Subcontractors can be individuals or businesses, and they must register with HMRC under the CIS scheme.
What are the responsibilities of contractors under the CIS?
Contractors must ensure that the subcontractors they hire for building projects have been confirmed by HMRC. It’s also their responsibility to file a monthly CIS return and make CIS payments to HMRC.
Ensure that subcontractors are HMRC-verified.
Before any work can begin, contractors must verify new subcontractors with HMRC so that they may confirm:
- The tax status of the subcontractor
- Whether the subcontractor is a member of the Construction Industry Scheme or not
- Contractors must also authenticate prior subcontractors if they were not included in a monthly CIS return during the current or preceding two tax years.
Completing a CIS return every month
Contractors must file a CIS return every month to inform HMRC of any payments made to subcontractors. You’ll need to keep precise financial records, as with most things related to HMRC. These should include the amount paid to subcontractors as well as the specifics of any deductions made.
CIS Return Services
Overpayments of taxes can quickly build up if you work in the construction business. This is where CIS comes into play. The Construction Industry Scheme (CIS) was created to provide construction companies and subcontractors with a specific avenue for receiving tax refunds.
- On-time and in the correct format, the CIS return was filed. You won’t have to worry about missing your CIS return deadline if you use CIS return services. Every time, we’ll submit it on time.
- Make the most of your tax refund by keeping meticulous records. Tax overpayments in the construction industry can be in the thousands. By supplying detailed documents, you can help you get the most out of your tax refund.
Not sure what can be claimed and what can’t?
If you are a subcontractor who has been stopped from paying CIS tax, you will need to file a Self Assessment tax return to recover a portion of your tax back.
It can go over all of the costs you can deduct to make sure you’re filling out the paperwork correctly and getting the most out of your tax refund. You can claim back on work-related expenses including equipment, uniforms, food, and travel on your CIS return.
