What is the Construction Industry Scheme (CIS)?
Under the CIS, Building and Construction contractors deduct tax at source from a subcontractor's payments and pass it directly to HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor's tax and National Insurance.
Who should register for CIS
All building and construction contractors must register with HMRC for CIS and any subcontractors who don't wish to have deductions at the higher rate of deduction should also register.
Before a contractor can make a payment to a subcontractor for construction work they must first verify with HMRC that that subcontractor is registered.
How does Grafter work with the CIS?
Business who are CIS Contractors should:
- consider whether or not they need to verify the subcontractor with HMRC
- verify the subcontractor with HMRC if necessary
- make payment to the subcontractor either with a CIS deduction or gross where no deduction is required
If a deduction is required, the contractor must:
- calculate the deduction
- make the deduction
- record details of the payment, materials and deduction
- make the net payment to the subcontractor
- complete and give the appropriate statement of deduction to the subcontractor
We are looking to carry out this function on your behalf to make engagement of Grafters on construction projects even easier in the future but at the moment these calculations and submissions needs to be completed offline, outside of the Grafter platform.
In the meantime Contractors can find and engage Grafters through the Grafter service and pay them through their own banking payment, net of the applicable tax deduction. We'll keep you up to date with developments on the Grafter service regarding CIS.
Note: this information is for guidance only related to use of the Grafter platform and should not considered as financial advice which should be sourced from a qualified accounting practice or other reputable source.
If you have any questions please feel free to contact us on Grafter Support