Accounting and the Construction Industry Scheme (CIS)

(Please, take note that we will not be liable for the content of this article as the reader has the obligation to check and verify this information)

People are turning to the construction industry to make a living, maybe leaving behind their previous employment and there may be other reasons for this like:

  1. It is a good business and pays well.
  2. For others it’s because they have a passion and drive to start their own construction business as they are familiar with the trade having learnt it from their parents.

Whichever way you look at it, there are many other reasons to do this kind of work or business and every person has their own unique story.

If you are joining the industry, there are elements to consider for self-employed people and for limited companies. You need to register for CIS (Construction Industry Scheme): But why? What do I need to register? How to register? We will start answering with other questions and answers.

  1. Do you have other subcontractors working for you in this industry who you pay? If yes, then you need to register.
    1. How to register? You can do it online (https://www.gov.uk/use-construction-industry-scheme-online)
    2. What will you need to register online? Your Gate Way Number, Your UTR (Unique Tax Reference number), National Insurance Number.
    3. There is also a help line phone number available by the HMRC providing help to register: 0300 200 3210.
  2. Are you self-employed and you are working for a contractor (but you do not have subcontractors)? If yes, then it is not a must to register but it is advisable because if you don’t register rather than the initial 20% tax reduction of your payments will be 30%. The contractor has an obligation to pay the HMRC this tax on your behalf.
    1. How to register? You can do it online (https://www.gov.uk/use-construction-industry-scheme-online)
    2. What will you need to register online? Your Gate Way Number, Your UTR (Unique Tax Reference number), National Insurance Number,
    3. There is also a help line phone number available by the HMRC providing help to register: 0300 200 3210. They will help you to register online.

Please be aware!!!

  1. If you were self-employed, you were registered for CIS but you have become a Limited Company you will need to register your Limited Company for CIS.
  2. If you are becoming self-employed (classified as Sole Trader) but you are not registered yet, you will need:
  • to register for self-employed.
  • get your UTR number.

Contractors need to know if they give work to others, individuals, they may be employing rather than contracting. It is important to check the difference as it would be considered “bogus self-employed.”

Written by Maureen Soto