Fusion Business Services provides an accountancy service especially for limited companies working in construction. It could provide you with all the assistance you need and exceptional value for money at the same time. Please keep reading for more information about our service and the Construction Industry Scheme (CIS).
What is the Construction Industry Scheme (CIS)?
If your company operates in the construction industry or does construction-related work, you may need to register with HMRC as a contractor or subcontractor. The Construction Industry Scheme (CIS) mandates how contractors must handle payments to subcontractors for construction work.
You should register for the CIS if you work for a contractor and you’re one of the following:
- The owner of a limited company
- A sole trader
- A partner in a partnership or trust
Under CIS, a contractor must deduct 20% from your payments. If you do not register for the scheme, contractors must deduct 30% from your payments instead. The contractor pays these deductions to HMRC as an advance payment towards your tax and National Insurance bill. Alternatively, subcontractors can apply for gross payment status, which means contractors can pay you (or your limited company) in full without deductions.
If you are a CIS subcontractor working through your limited company, any CIS deductions made by a contractor before payment to a limited company can be offset against the limited company’s corporation tax liability. HMRC can also refund this directly to the subcontractor after the end of the tax year.
If you are a sole trader, any CIS deductions taken from you as a subcontractor are offset against your personal tax liability and will be listed on your self-assessment tax return.
Your business is based outside of the UK
CIS rules apply if your business is based outside of the UK, but you do construction work as a contractor or subcontractor in the UK. Complete guidance is available on the government’s website.
The benefits of a CIS limited company
There are many benefits of operating a CIS-registered limited company:
- Monthly tax deductions of only 20% as opposed to 30% if you are not CIS registered
- Tax relief on pension contributions
- The opportunity to apply for gross payment status to enjoy the additional payment benefits of a limited company
- You can claim expenses for tools and equipment used for your construction work
- As a shareholder of your limited company, you can pay yourself a dividend
- Additional tax savings, flexibility and control over your finances
How to register for CIS
To register for CIS, you will need the following:
- Your National Insurance Number
- Your legal business name – you can also give your businesses trading name if it is different to your business name
- The unique taxpayer reference number (UTR) for your business
- Your VAT registration number (if your business is VAT registered)
If you are a contractor (you pay subcontractors to do construction work) and a subcontractor, you will need to register for CIS as both.
HMRC has a dedicated CIS helpline for help with registering or if you want to speak to a representative about becoming CIS registered. You can also sign up for webinars and emails to watch useful videos about CIS on the government’s website.
Benefits of using Fusion Business Services for your CIS Limited Company
Using an expert in CIS accounting allows you to run your limited business easily. When you use our CIS limited service, you can benefit from the following:
- Company incorporation
- Corporation tax and PAYE registration
- Your CIS registration forms
- VAT registration (if applicable)
- FRS registration (if required)
- Your administration (monthly returns)
- Expert advice and support from your dedicated Account Manager
To find out more about our CIS limited service, please call Fusion Business Services on 0800 229 4020.