Subcontractors: Be aware of your Construction Industry Scheme obligations

If you work for a contractor, you must be on top of your obligations under the Government’s Construction Industry Scheme (CIS).

Whilst the contractor is responsible for deducting money from your pay and making the necessary payments to HM Revenue & Customs (HMRC), as a subcontractor, you also have an important role to play.

Who is classed as a subcontractor?

You must register as a subcontractor for the CIS if you conduct work for a contractor and are either a sole trader, own a limited company, or are a partner in a partnership or trust.

If you are classed as an employee, you do not need to register for the CIS.

How can you register?

If you are a sole trader, you can register online using the Government Gateway, or alternatively you can register using an online form.

If you need to register, you should get prepared by gathering the following information:

  • Your National Insurance number
  • Your legal business name/trading name
  • The business’s unique taxpayer reference number (UTR)
  • The VAT registration number (if applicable)

What is gross payment status?

Gross payment status allows for you to be paid in full, without contractors deducting money under the CIS.

To be eligible for this, you should have paid National Insurance contributions on time previously and you must be able to prove that your business does construction work in the UK. The business’s finances should also be run through a bank account.

Additional requirements are that the business’s annual turnover is at least £30,000, if you are a sole trader.

For partnerships and companies, turnover should be at least £100,000 as a whole, or £30,000 for each Partner/Director.

However, this does not mean that you are exempt from paying tax. When you complete either your Self Assessment tax return (if you are a sole trader or partner) or your Corporation Tax return (if you own a limited company), these payments must be declared as income.

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