Construction workers play a vital role in the way our landscape changes, creating everything from new homes to towering skyscrapers. When it comes to CIS (Construction Industry Scheme) tax and how it is deducted, it can be complicated to understand if you aren’t familiar with the way it works. The scheme is covered in complicated paperwork that could lead to costly penalties should subcontractors, contractors, and self-employed workers not register.
At Every Penny Accounts, our skilled accountants provide CIS return services to our clients in Ripon and the surrounding areas. Our expert accountants have created this informative guide to ensure that no matter your existing knowledge – or lack thereof, you can understand exactly how CIS works and how it can impact you.
Who Needs to File a CIS Return?
There are a few ways to identify whether or not you need to file a CIS return or not, but our team has kept this simple for you. However, it is important to note that whether or not you work within the construction industry, if you have been a part of a construction project that cost £3m or more, you will need to register, but also:
Contractors:
Contractors will always handle the initial CIS deduction for payment on a construction project, but they will also need to submit monthly returns that must be accurately recorded to HMRC.
Self-employed construction workers:
If you are a subcontractor receiving payments under the CIS scheme, you are required by law to complete a self-assessment tax return – which differs from CIS. If you do not register, you’ll automatically be taxed at a higher 30% rate.
For more information or a more detailed breakdown of who needs to file for a CIS return, contact the team at Every Penny Accounts to find out more. Our team is here to help, so don’t wait, get in touch now.
The Benefits of Filing a CIS Return
There are many benefits to filing your CIS return, though the process can be time consuming. If you would like to streamline the process, our team can help! Choose Every Penny Accounts and experience the advantages for yourself, including:
Financial Clarity
Filing for CIS helps you keep track of your overall earnings and expenses, which is vital when it comes to budgeting and planning for future tax years. This can be highly beneficial for those operating as self-employed as you will always have clarity on your income and leave space to grow down the line.
Claim Back Overpayments
If you are registered for CIS, instead of receiving a tax deduction of 30%, you will instead receive a deduction of 20%. However, this may exceed your actual tax liability and you may be due a hefty tax refund, which is why filing is an essential step that must be taken no matter how time consuming it may seem.
Avoid Fines or Penalties
Failure to file your CIS return can lead to costly fines, which can be devastating financially if you aren’t in the position to pay them. Additionally, if you have already started working on a construction project and have not yet completed your CIS registration, you will have to pay a late fee determined by how long you have been working unregistered.
CIS Return Process
When you’re working under CIS, filing your self-assessment tax return should be a regular part of your financial routine. Your tax return must be completed at the end of the tax year and subcontractors who are employed through CIS have until January 31st to submit their tax return in line with the self-employed deadline.
Meanwhile, in order to stay compliant with CIS and carry out accurate reporting of payments made, contractors must file returns monthly by the 19th of each month following the last tax month to HMRC.
Avoiding mistakes during online or postage filing is essential to make sure you don’t pay more tax than you should, which is where the expert accountants at Every Penny Accounts can help. We offer guidance, advice, and a bespoke service to make sure your CIS paperwork is filed accordingly.
Get in touch with Every Penny Accounts for more information!
To find out more or to enquire about an accounting service that is tailored to your unique needs and requirements, reach out to the experts at Every Penny Accounts now. In addition to CIS returns, we also handle bookkeeping, payroll, and accounts, so choose us for a reliable team and a professional, HMRC compliant service!
