What is CIS?
CIS dictates how HMRC require contractors to pay subcontractors who perform construction work.
It relates to self employed, limited companies and LLP's.
It covers Builders, Labour agencies and staff bureau's, Gangmasters or gang leaders and property developers.
What do CIS Contractors Need to do?
To be paid by Umbrella you have to initially be registered as self-employed with HMRC.
To register as Self-Employed you need to ring the HMRC helpline on 0845 915 4515. At the same time you should also be able to register for the Construction Industry Scheme (CIS).
To register as a subcontractor you must have a National Insurance number. If you do not have one please contact the Department for Work and Pensions on Tel 0845 600 0643.
You will then receive a Unique Tax Reference (UTR) which is a 10 digit number.
If you have any issue regarding CIS or in getting a UTR then a CIS Helpline is available from HMRC on 0845 366 7899 or by calling Umbrella on 0800 121 6513.
To register with Umbrella please call 0800 121 6513.
Being paid as a CIS Contractor
We invoice and collect monies due from your agency and pay you on based on the income we receive from your agency less a small weekly margin. We also deduct the appropriate tax (normally 20% deducted) and pay the money into your bank account to credit every Friday.
We will text you on Thursday the amount you are being paid.
What Umbrella CIS do
Umbrella are registered with HMRC for CIS.
We will send you a monthly summary of gross and net payments made.
As part of our additional services Umbrella Accountants can help prepare your year-end tax return for a small additional cost.
What Tax is deducted ?
Where you have a UTR number then the normal tax rate we deduct at source is 20%.
Where you don't yet have a UTR number but can provide a National insurance Number then we deduct an emergency type rate of 30%. Any overpayment of tax will be refunded via your year-end tax return.
Some subcontractors may be paid without any deduction of tax providing they apply and satisfy the HMRC requirements to do so (HMRC will confirm this to us where it is the case).
Taxation if you are a sole trader or partner in a firm
HMRC treat the CIS deductions from your invoices as up-front payments towards the tax and Class 4 National Insurance contributions (NICs) due from your business. To make sure you pay the right amount of tax for the year as a whole you'll need to submit the appropriate Self-Assessment Tax Return for your business.
When you work out the tax payable by your business, you use the full amount of the invoice. Credit will be given against the tax due for any CIS deductions that contractors have deducted. When your allowances and expenses are taken into account you may be due a tax repayment. If you owe any additional tax it'll be due by 31 January following the end of the tax year.
Can I claim tax relief for expenses?
As self-employed you are taxed under Schedule D.
Expenses do not get processed weekly against your income but you should keep a record and all receipts (including travel) so you can include them in your self-assessment at the end of the year.
Our margin is deducted before calculating you tax deduction so relief is automatically given.
Further information is available at:
Why Umbrella CIS?
Your legally required insurances are provided (Public Liability).
Additional cover is available at a small incremental cost i.e. Personal Accident, Death in Service.
If you are contractor, subcontractor or recruitment agency requiring advice on the Construction Industry Scheme please: Call Umbrella on 0800 121 6513 or email firstname.lastname@example.org
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