How does CIS work?

If you are a contractor working under the Construction Industry Scheme (CIS), a specialist accountancy service can offer many benefits, mainly as they are designed to help you operate efficiently whilst reducing your admin.

The Construction Industry Scheme (CIS) is a taxation scheme for individuals and businesses, including limited companies, working within the construction industry. CIS determines how self-employed construction workers pay tax. If you register for CIS, the contractor will deduct tax at 20% of your invoices, which will be paid to HMRC. You will then be paid the remaining 80% along with any additional amounts for costs such as materials. If you do not register for CIS, tax will be deducted at 30%.

The benefits of a CIS limited company

The main benefits of operating a CIS-registered limited company are:

  • Deduction of 20% tax on your invoices as opposed to 30% if you are not CIS registered
  • You can apply for gross payment status and enjoy the additional payment benefits of a limited company
  • You can apply for the VAT Flat Rate Scheme
  • You can claim back the cost of certain allowable business expenses, such as tools and materials
  • Tax relief on pension contributions
  • The option to pay yourself a dividend as the shareholder of your own limited company
  • Additional tax savings and better tax planning options

How to register for CIS

The quickest way to register is online via the government’s website. To register, you’ll need:

  • A Unique Taxpayer Reference
  • A Government Gateway user ID and password

If you do not have a UTR, you can register as a new business for self-assessment and choose ‘working as a subcontractor’. You’ll be registered for self-assessment and CIS at the same time.

Benefits of using an accountant for a CIS-registered limited company

While a registered CIS limited company has many benefits, it also comes with administrative and accounting responsibilities. You must ensure all paperwork is up-to-date, issue invoices, meet filing deadlines and ensure all bookkeeping is sufficiently recorded. A CIS accountant can reduce the administrative burden and give you complete peace of mind and confidence that your financial accounts are accurate. And your filing and reporting deadlines are met.

Looking for an accountant? Contact Churchill Knight & Associates Ltd today!

If you require the services of a professional accountant with FCSA accreditation, our sister company is the perfect fit. Founded in 1998, Churchill Knight & Associates specialises in multiple accountancy services, including contractor accountancy, CIS limited company accountancy, contractor accountancy, accountancy for landlords, and specialist services for landlords.

Please click on the button below to be taken to the contact page on the Churchill Knight & Associates Ltd website. Alternatively, please call 01707 871622 and ask our friendly team to discuss your requirements with you as part of a free, no-obligation consultation.

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