Everything You Need to Know
Struggling to get to grips with the Construction Industry Scheme and your obligations relating to it? You’re not alone. It can be difficult to get your head around, especially if you are just getting started in the sector. Luckily, we are here to help. As a leading construction accountancy firm, we know our stuff when it comes to the CI. Whether you are asking ‘how does the Construction Industry Scheme work?’ or ‘how to register for Construction Industry Scheme’, we are here to help you.
What is the Construction Industry Scheme?
First things first: what is the Construction Industry Scheme? It is a tax system that was put together by the UK government to better regulate tax payments within the construction sector. The scheme sets out rules for contractors and subcontractors and makes sure that tax is correctly deducted at the source before payments are made.
Why was it needed in the first place? It was introduced to improve compliance and make the process of collecting tax revenue much more straightforward. Thanks to the CIS, incidents of non-payment have been reduced, and the system is a lot more transparent.
Who Needs to Register?
Any contractor that pays a subcontractor to carry out construction work in the UK needs to register for the scheme. If your business makes construction payments and receives them, you are classed as both a contractor and subcontractor.
Confusing? Don’t worry, we’re here to break everything down and ensure that if you need to register, you are.
If you’re unsure how these roles apply to your business, take a look at our guide on How does CIS Work for Contractors and Subcontractors?, where we explain responsibilities, deductions and what’s required depending on your role.
Do Partnerships need to Register for Construction Industry Scheme?
Yes, they do. Whether you are a sole trader, in a partnership or own a limited company, you need to register if you meet the criteria.
What is Included in the Construction Industry Scheme?
The Construction Industry Scheme covers most construction work carried out on a permanent or temporary building or structure, as well as civil engineering work like roads and bridges. Any of the following apply:
- Site preparation
- Alterations
- Dismantling
- Construction
- Repairs
- Decorating
- Demolition
- Installing systems for heating, lighting, power, water and ventilation
- Cleaning the inside of buildings after construction work
How do you Register for CIS?
To register as a contractor, you need to follow the process for setting up as a new employer. This is something that we can help you with. Once this has been completed, you will need to wait for a letter from HMRC. This will have all the information you need to start working as a Construction Industry Scheme contractor, including your employer’s PAYE reference number.
If you would like a step-by-step breakdown of the process, take a look at our guide on How to Register for CIS, where we explain everything you need to do.
We’re Here to Help
Still asking yourself, ‘how does Construction Industry Scheme work?’. We’re here to help. Just get in touch with our team today, and we will be able to tell you if you need to register. We can then help you get to grips with your tax obligations with our tailored accountancy services.
