Construction Industry Scheme (CIS) Tax Return

If you work under the Construction Industry Scheme (CIS), you must file a self-assessment income tax in your first year of trade and every year after that. You’ll file your tax return in April, just at the close of the financial year, and pay any taxes owed by the next January.

What Are CIS Tax Returns?

Most people in the construction industry must file CIS tax returns. However, if you make a mistake when completing your CIS tax return online, you may end yourself paying significantly excessive tax on your earnings.

Whenever you’re paid via CIS, your contractor must deduct a significant portion of your compensation before you receive it. That money is sent directly to HMRC. It’s meant to be an “advance payment” toward the taxes and National Insurance you’ll contribute. Unfortunately, your contractor has no option; this is simply how the law operates.

Contractors must sign up for the program. Subcontractors are not required to register. However, if they don’t, deductions from their revenues are made at a greater rate. Once you’re a registered contract worker, you may use CIS online to complete your monthly returns or check a subcontractor.

Who Needs to Register for CIS Tax Return?

The Construction Industry Scheme (CIS) is an HM Revenue and Customs (HMRC) scheme that operates if you work for a contractor in the construction sector and not as an employee, for instance, a self-employed individual. According to the CIS regulations, the contractor is normally entitled to deduct tax on its reimbursements to you, at either 20% if you are registered or 30% if you are not.

This is in contrast to other self-employed persons outside of the construction business, who often get gross payments, meaning no tax is withheld. GOV.UK outlines how to apply as a subcontractor for the CIS and also what documentation you may need to do so. Many alternatives are available based on whether you have previously qualified as self-employed and whether you operate for yourself as a single trader or via a different commercial organization, such as a collaboration or a limited company.

What Construction Work is Covered under CIS?

When determining the exact money you spend in tax and National Insurance contributions (NIC) for your tax filing, you can include any cost incurred “wholly and exclusively” for the reasons of your business, including van costs, equipment and techniques, and admin expenses, along with cell devices. The Gov.uk covers a list of work that falls under the CIS tax return, which includes-

• Forming the site such as laying the foundation and granting access
• Demolition
• Repairs and decorations
• Installations
• Cleaning after construction and more.

Who May NOT Register For The CIS Tax Return?

There is more to construction than just building structures. There is considerably other work that the site needs to make it functional such as interior, delivery, etc. Here’s a list of certain jobs that do not require you to register for CIS tax filing-

• Scaffolding hire
• Carpet fitting
• Material delivery
• Running a canteen
• Providing site facility
• Manufacturing construction equipment, etc.

What Is The Deadline For Filing the Tax Return?

You need to send your monthly returns to HMRC no later than the 19th of the month following the previous tax month.

Example If you are submitting a statement for the tax period of 6 May to 5 June, it must be received by HMRC by the 19th of June. If you fail to file your returns by the deadline, you will be penalized. However, If you notify HMRC that you did not pay any subcontractors that month, the fine will be waived.

If you’d like us to complete a Self-Employed Tax Return for you, please complete a few details about yourself in the form below and one of our tax specialists will be in contact with you shortly.

For more information on our Construction Industry Scheme (CIS) tax return service or to find out about our other accountancy services, contact our Brentwood accountants today.