TAX TOOLS TO HELP CONSTRUCTION
There are various requirements for contractors and subcontractors within the Construction Industry Scheme (CIS).
For contractors, they must verify subcontractors before making any payments to them. Verification is done online using the subcontractor's UTR and National Insurance number if an individual, or UTR and Company Registration Number (CRN) if a limited company. By doing this HMRC will confirm the tax rate to be applied to the subcontractor, whether it be the normal rate of 20%, higher rate of 30% or no tax if has gross status.
The contractor is required to deduct tax on the labour element of the subcontractors' payment and the tax is paid to HMRC. The contractor is required to issue the subcontractor with a payment and deduction statement showing the gross and CIS tax deducted amounts. A CIS return will need to be submitted monthly by the contractor to confirm to HMRC the subcontractors and amounts paid in that month.
The contractor has the option to offset any CIS on their subcontractors payments against CIS they have had deducted on their sales or against PAYE.