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 NI.
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?
Businesses 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
If you need to make CIS deductions from a grafter payment contact us through at Support and we can produce invoices net of CIS deduction to enable you to pay the correct amount to the grafter. You can then include the CIS tax deduction within your monthly return and pay any tax collected to HMRC.
You will need to find and engage grafters in the usual manner through the platform but advise us at firstname.lastname@example.org of the requirement to deduct CIS so we can ensure we can provide all the necessary information.
Note: this information is for guidance only related to use of the Grafter platform and should not be considered as financial advice which should be sourced from a qualified accounting practice or other reputable source.