If you`re working in the construction industry, you may have heard of the Construction Industry Scheme or CIS. CIS is a tax deduction scheme that was introduced by HM Revenue and Customs (HMRC) to help reduce tax evasion in the construction sector. The scheme requires contractors and subcontractors to register with HMRC and submit their payment details.

But who exactly needs to register as a contractor for CIS? Let`s take a closer look.

Contractors

Contractors are businesses or individuals who pay subcontractors to carry out construction work. If you hire subcontractors as part of your business, then you need to register for CIS.

If you`re a contractor, you`ll need to register with HMRC and verify your subcontractors` payment details before you make any payments to them. You`ll also need to submit monthly returns to HMRC, detailing any payments made to subcontractors and the amount of tax deducted.

Subcontractors

Subcontractors are businesses or individuals who carry out construction work for contractors. If you work as a subcontractor in the construction industry, you`ll also need to register for CIS.

Registering as a subcontractor will allow you to apply for gross payment status. This means that, instead of having tax deducted from your payments, you`ll receive your full payment and be responsible for paying your own tax and National Insurance contributions.

However, to be eligible for gross payment status, you`ll need to meet certain criteria. This includes:

– Having a turnover of at least £30,000 a year

– Having a satisfactory record with HMRC

– Being up to date with your tax returns and payments

In some cases, subcontractors may be exempt from CIS. This could include individuals who only carry out construction work as a hobby or those who work in the construction industry for less than six months a year.

Conclusion

In summary, if you work in the construction industry as a contractor or subcontractor, you`ll need to register for CIS. As a contractor, you`ll need to verify your subcontractors` payment details, deduct tax from their payments and submit monthly returns to HMRC. As a subcontractor, you`ll need to register for CIS to be eligible for gross payment status and be responsible for paying your own tax and National Insurance contributions.

If you`re unsure whether you need to register for CIS or have any other questions about the scheme, it`s always best to seek professional advice from a qualified accountant or tax specialist.