CIS Contractors and Subcontractors have trusted Canalitix to manage their accounts and tax rebates for several years.
HMRC requires contractors to register for the Construction Industry Scheme (CIS) and to verify subcontractors so they can determine the correct CIS deduction rates to apply to subcontractor payments.
Subcontractors registered with HMRC pay the standard 20% deductions, as opposed to the higher rate of 30% for unregistered subcontractors. In addition, some subcontractors are approved for gross payments where they have a history of filing and paying taxes on time.
Unlike PAYE, CIS deductions are taken from the subcontractors’ gross income without considering their annual personal allowance.
HMRC treats CIS deductions as advanced payments of income tax and national insurance. As a result, subcontractors are normally due tax rebates after the end of the tax year.
Our staff have extensive experience with assisting Clients in the construction industry to comply with their CIS accounting and HMRC reporting requirements and are able to assist with:
- registration of contractors and subcontractors for CIS with HMRC
- verifying subcontractors to ensure they pay the correct amount of CIS tax deductions at source. The standard CIS tax deduction is usually 20% for registered subcontractors and the higher rate of 30% for unregistered or unverified subcontractors.
- monthly CIS reporting for contractors
Unlike employment income where PAYE is deducted at source and which takes account of the taxpayer's tax-free annual allowance, CIS deductions are taken from the subcontractors’ gross pay without reference their annual tax-free allowance.
This means that CIS subcontractors must claim a rebate for any overpayment of income tax in their annual self assessment tax return.