What is the Construction Industry Scheme?

HMRC hires the Construction Industry Scheme (CIS) to raise income tax from subcontractors in the construction industry.

How CIS operates 

CIS allows licensed contractors to subtract money from subcontractor fees and submit it to HMRC. The deductions of either 20% or 30% are considered upfront fees for the subcontractor's tax and NI contributions.



Work covered by CIS 


Contractors in the construction industry often hire individual subcontractors to work on contracts for them rather than hiring full-time employees.

Since these subcontractors are self-employed and not employees of the employer, they are unable to apply to Income Tax and National Insurance by PAYE. Instead, HMRC collects tax contributions from these subcontractors through the Construction Industry Scheme.

Responsibilities for contractors

Responsibilities for contractors, both the employer and their workers are liable. When hiring vendors, have the following in mind:

  • Ensure that employers have the necessary qualifications and experience so that they do not endanger their own (or someone else's) health and welfare in the workplace.
  • assess the work's vulnerability and its consequences for health and safety.


What is a subcontractor?

A subcontractor is a person or an entity who does work on behalf of a manufacturer, who is responsible for their fitness, welfare, and behavior.

Contractor workers, on the other hand, are not considered subcontractors and must be treated as such.

Example:

To complete the work on a construction site, a building contractor might hire a plumber or an electrician as a subcontractor.

Support from Accotax


Many individuals even consider prosecutors to be devil's advocates. Although the "courtroom drama" will still be a staple, depicting lawyers solely in that context is a little impolite. Regardless of the type of your company, you would need both legal and accounting services. Every now and again, you'll run into problems with corporate relations.

Our accountants in London help you out in every accounting and taxation service. To find out more, get in touch on 0203 441 1258 or info@accotax.co.uk. 


Resources:

1. https://ext-5636255.livejournal.com/5543.html

2. https://12shanzarao.wixsite.com/my-site-11/post/how-does-the-construction-industry-scheme-cis-work

3. https://accotax-london-accountants-123.weebly.com/blog/what-is-construction-industry-scheme-and-how-does-it-work

4. https://accountantsforsmallbusinesses.wordpress.com/2021/04/03/what-is-the-cis/

5. https://12shanzarao.medium.com/how-to-operate-the-construction-industry-scheme-cis-as-a-limited-company-or-sole-trader-b85f199e50a4

6. https://gumroad.com/accotaxlondon1/p/an-introduction-to-the-construction-industry-scheme-cis

7. https://accotax.co.uk/cis-accountants/

8. https://www.gov.uk/what-is-the-construction-industry-scheme










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