Page 7 - Perfect Balance - Sle Trader Guide

CIS – The Construction Industry Scheme
This scheme applies to self-employed workers and businesses in the Construction Industry. Under the scheme, tax is deducted from payments and paid over to HMRC. If you are planning to work as a Contractor or Subcontractor you will need to register with HMRC for the CIS scheme.
Click here to find out if you are a subcontractor, contractor or both https://www.gov.uk/what-is-the-construction-industry-scheme
How to register
You can register online via your Government Gateway www.gov.uk/sign-in
or you can call HMRC on the CIS helpline 0300 200 3210. They will need your UTR number and personal details to help register you for CIS.
Don’t forget to add CIS as a service to your Government Gateway account following steps 1 - 3 on page 5.
How does CIS work?
When hired by a contractor you will need to give them your registered name, UTR number and NI number so they can verify that you registered for CIS.
Once verified, they will deduct 20% tax from your invoice (excluding VAT and materials). These deductions count as advance payments towards your Tax and National Insurance.
(If you are not registered, they will need to deduct 30% so it is worth making sure you have everything in place from the start to avoid extra deductions.)
When you complete your annual Tax Return, you can credit any CIS tax already deducted.
You can apply for Gross payment status if your annual income is £30,000 or over. This means the contractor will not make deductions from your payments and you will pay the Tax and National Insurance at the end of the financial year.
If you have gross payment status, HM Revenue and Customs (HMRC) will review your business every year, to decide if you can keep your status. You must be on time with your tax returns and payments to keep your gross payment status.
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