AGENCY CIS PAYROLL
The Perfect Solution For Individual Working In The Construction Industry
The Construction Industry Scheme (CIS) refers to a tax regime set out by HM Revenue & Customs (HMRC) to cater for self-employed contract workers in the construction industry. As a result of the amendment made to section 44 of the Income Tax (Earnings & Pensions) Act (often labelled the agency legislation) there are now stricter rules surrounding the employment status of contractors, with the burden of proof over a lack of supervision, direction or control now resting with the agency.
What is The Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a tax regime that HMRC set up to cater for self-employment in the construction industry. Tax is deducted at either a higher (30%), net (20%) or gross level depending on the status of the subcontractor’s UTR number.
CIS tax deduction rates are as follows:
- ‘Net’ deduction (20%) – a flat rate of 20% is the standard deduction for subcontractors who have registered their UTR number under the CIS
- Higher deduction payment (30%) – Deductions at the higher rate of 30% may be taken if the UTR number you’ve provided to the contractor is either incorrect or has not been registered. If you are having problems with your UTR number being verified by contractors, you should contact the CIS office for assistance.
- Gross payment (0%) – If you have been granted gross payment status by HMRC there will be no deductions made on your payment. As is compulsory with self-employment, a self-assessment tax return is then completed at year-end, at which point your tax and national insurance bill for the year is calculated. Any CIS deductions suffered will be offset against your final tax bill.
When completing your tax return, you will be able to offset any expenses incurred throughout the year against your income for tax purposes. Any overpaid tax will be reimbursed to you by HMRC.
To register for the Construction Industry Scheme, you must:
- Register for self-assessment with HMRC who will provide you with a Unique Taxpayer Reference (UTR) number.
- Contact the CIS office and register your UTR under the CIS, reducing the deductions made on each payment to you.
- As a self-employed subcontractor you have the freedom to work when and where you want to. By contracting through Bishopsgate you will save yourself time by removing the administration burden of invoicing, as self-bill invoices will be raised on your behalf.
- Your payments will be processed with the relevant CIS deduction made on your behalf. This will be passed over to HMRC and will be offset against your tax bill when you come to complete your self-assessment tax return at the financial year end.
If you are a contractor looking for a CIS payroll company for your subcontractors, then please visit our contracting services page.
Benefits of Agency CIS Payroll
Flustra specialise in the processing of payments to subcontractors working within the construction industry. The benefits of our service to subcontractors include:
- You are in business on your own account and can decide which jobs to take on and how often to work
- Ability to offset your business expenses against your tax bill through a yearly tax return
- Reduced payment terms and faster payments compared to contracting directly with an end client
- Reduced administration as BONGOS takes care of invoicing, payment and issuing statements
- Access to health and safety advice
- Statements provided for all payments made
Register for CIS (Construction Industry Scheme) services
If you are going to begin trading as a sole trader, you will need to register as self-employed with HMRC, in order to receive your Unique Taxpayer Reference (UTR) number. You can do this online through the Gov.uk website, or by calling 0300 200 3500.
Once you have registered for self-employment and received your UTR number, you need to register this on the CIS scheme, by calling the CIS office on 0300 200 3210. If you do not register your UTR you will have tax deducted at the higher rate of 30% on all payments made to you.
To complete your registration with Flustra, we will also request your proof of eligibility to work in the UK as well as a signed contract. After this is completed, you will be ready to get paid.