If you are employed by a contractor, you must comply with all your responsibilities under the CIS as a Subcontractor.
As a subcontractor, you have an important role to play, even though the contractor is responsible for deducting money from your salary and paying HMRC.
Who is considered a subcontractor?
If you work for a contractor and are a sole trader, run a limited business, or are a partner in a partnership or trust, you must register as a subcontractor with the Construction Industry Scheme (CIS).
You do not need to register for the CIS if you are an employee.
How do you sign up?
If you’re a sole trader, you have two options for registering: via the Government Gateway or using an online form.
When registering, you’ll need to gather the following details:
- Your legal business name/trading name
- Your NI number
- The business’s unique taxpayer reference number (UTR)
- The VAT registration number (if applicable)
What does it mean to have a gross payment status?
Gross payment status enables you to get paid in full, without contractors withholding money under the CIS, allowing you to receive your complete wage.
To be eligible for this, you must have paid your National Insurance payments on time in the past, and you must be able to demonstrate that your business is active in construction in the United Kingdom. There should also be a bank account to handle the company’s finances.
An additional criteria for sole traders is that the business generates at least £30,000 in yearly revenue.
The combined annual revenue of partnerships and businesses should be at least £100,000, or £30,000 for each partner or director.
That doesn’t imply, though, that you won’t have to pay taxes. If you are a sole trader or partner, or if you own a limited business, these payments must be declared as income when you file either your Self Assessment tax return or your Corporation Tax return.
If you need help regarding CIS, please get in touch with us at enquiries@aitaccountants.co.uk
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