Our Most Common CIS Questions
10th May 2016
A lot of RIFT's clients work in construction, so we handle loads of queries and paperwork involving the CIS. Here are answers to some of the most common questions we get about the scheme.
What does CIS stand for?
CIS stands for the Construction Industry Scheme. It’s a special tax scheme just for the construction industry. It affects most construction work done in the UK, from site preparation to repairs, decoration and demolition. There are some exceptions but, for most general contractors, the scheme's compulsory.
How do I register for CIS?
If you're a self-employed construction subcontractor, you've got a few main options for registering for CIS. You can:
- Contact the CIS helpline on 0845 366 7899.
- Use the HMRC website.
- Get in touch with RIFT and switch from PAYE to CIS.
If you're using the HMRC website, you'll need to log in using your Government Gateway ID. However you choose to do it, you'll also have to give them:
- Your Unique Taxpayer Reference (UTR)
- Your VAT registration number, if you have one.
- Your National Insurance number.
- Your legal business name or trading name.
If you need help on getting your Limited Company correctly set up and registered then get in touch with RIFT Accounting.
Why should I register as a CIS Subcontractor?
Registering with the CIS may not strictly be compulsory for subcontractors, but it can be painful if you don't.
Registering means that your contractor takes 20% of your pay and gives it to the taxman. If you're not part of the scheme, that cut rockets up to 30%!
It might be possible to apply for "gross payment" status, meaning the contractor won't take anything from your pay. You'll have to pass some tests to qualify, though. Even if you do, you'll still have to pay all your tax yourself at the end of the tax year.
Also, the taxman will check every year to see if you still qualify.
How do I pay tax as a CIS worker?
The Construction Industry Scheme rules say that contractors must take 20% from the invoices they pay. That money goes to the taxman without the subcontractors ever seeing it, in the same way as if you were employed.
When you submit your Self Assessment tax return, you'll find that most or all of your tax has already been paid. In fact, since the money's been taxed at 20%, you may well have paid too much. If that does happen, you can claim a CIS tax refund.
As you can also claim for various work related costs against your in your tax return you may find that you have a lot to claim back of that 20% you've paid out over the year. Our average CIS claim is £2000.
Claiming tax refunds for construction is what we were set up to do, so no one knows more about getting the most back in your pocket than us.
What's a CIS deduction?
A CIS deduction is the money a contractor takes from a subcontractor's pay before forking it over. Right now, the rate stands at 20% - paid straight to the taxman every month.
What's a CIS card?
There are several kinds of card issued to CIS subcontractors, depending on their circumstances:
- CIS 4(P) - the basic card most subcontractors get.
- CIS 4(T) - a temporary card if you can't give HMRC your National Insurance number for some reason.
- CIS 5, CIS 5 (Partner) or CIS 6 - cards you might get if you've passed the tests for "gross payment status", depending on your situation and business.
What expenses can I claim as a CIS subcontractor?
It's not always easy to know what you can legally claim as expenses as a CIS subcontractor. It's a tricky business, and means many construction workers end up paying too much tax each year. Here's a quick rundown of things you can claim for:
- Equipment, tools and materials.This is the probably most obvious category. Don't forget to include things like maintenance costs for your gear. If you supply your own specialised or protective clothing, you can claim it as an expense. You might even be able to include laundry costs.
- Travel and transport.When you're shelling out for travel to temporary workplaces, keep track of your mileage, food and accommodation costs. Hold onto receipts . You'll need them to prove what you've spent.
- Office costs.This can cover anything from internet bills to stationery. Remember you can only claim for legitimate business expenses, though. Your printer ink will probably qualify. Your Netflix subscription won't. If you work from home, you might be able to claim for a proportion of your household bills, too.
- Administrative costs.If you've got people (even family members) helping you with things like bookkeeping, keep records about what they do. There are strict rules about claiming this kind of thing as an expense, but if you're paying them, it might count.
Can I get help with CIS?
For any other questions you have on CIS, or for any help and advice you need, come to RIFT. It's easy to end up overpaying taxes, and the taxman won't cough up unless you prove he owes you.
We've been helping construction professionals keep more of their own money safe from HMRC since 1999. Just get in touch to start laying the groundwork.
What should I do if I have worked CIS and PAYE in one year?
If you've worked part of a year under PAYE and part under CIS, don't worry we can still do your tax rebate and tax return for you. It's a little more complicated but you won't get any of that stress yourself, because we're here to help.