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Construction Industry Scheme
The new rules for the Construction Industry Scheme were introduced on the 6th of April 2007. Instead of receiving a CIS card you will now only need a CIS number.
If you are self-employed you will need to contact the Inland Revenue directly to get a CIS number. This process normally takes 3-4 weeks.
If you are working through a CIS company, the company must be registered with the Inland Revenue for CIS. If you have an All Tax UK Fully Administered Company (FAC), we will do this for you. The number is normally issued around 20 days after the company is incorporated. Your employer will then need to verify your company with the Inland Revenue and make the appropriate deductions. The standard CIS rate is 20% and this will be deducted from your weekly wage. If your company has not been registered for CIS, the deduction rate will be 30%.
Each month you should receive a deduction statement (instead of the old CIS25 vouchers) from your employer. These will be made out to your company. You will need to retain these in order to claim back the refund. The deduction statement summarises your CIS deductions for the month.
As your annual deduction is usually higher than your final company taxation bill, you will be entitled to claim a repayment at the end of the tax year. This is called a CIS refund. Applying for and receiving this refund can be a drawn-out and complicated process. Unless you have first hand knowledge of the UK taxation system, it can be virtually impossible to obtain a refund, as a lot of construction workers have discovered to their peril.
We at All Tax UK pride ourselves on being the only specialised CIS accounting and taxation company in London. Before you begin contracting in the construction industry, we recommend you contact one of our fully qualified consultants to discuss the options available to you. Although it may appear complicated, working under CIS can be a simple and efficient means of managing your tax affairs whilst contracting in the UK, provided you take the right steps at the beginning.
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