If you’re working in construction, the government-run Construction Industry Scheme can make your life easier. It can also be the difference between paying 20% and 30% tax! However, working out whether or not you qualify for CIS can be confusing. We’re here to help by giving you six questions to ask yourself when considering CIS subcontracting.
1. Will you be working in the UK?
Starting off with an easy one; the scheme does not apply to work that is done outside of the UK. So whether you’re a business based in or out of the UK, as long as the work you carry out is within the UK (including its territorial waters up to a 12 mile limit) then it’s covered by the scheme and you must register accordingly.
2. Do the services you provide fall under CIS?
Whilst you’ll often hear that CIS covers “all construction work carried out in the UK” there are certain services you may think are covered by the scheme which actually aren’t, and vice versa. For example, transport of materials on-site is included for construction operations, whilst transport of materials from site to site on the public highway for construction operations is excluded. To make sure the work you’re doing is included, you can always check with your CIS payment provider or take a look at this list provided by the government (appendix C).
3. Have you got a UTR and is it registered for CIS?
The HMRC registration process is straightforward; you’ll need your business/trading name, National Insurance number and UTR (Unique Taxpayer Reference) number. Your UTR number is 10 digits long and unique to every UK taxpayer. If you don’t have a UTR number you’ll need to register for self-assessment first, HMRC will then issue you with one. Your payment provider will then use this to verify your details with HMRC.
4. Are you self-employed?
HMRC’s definition of the Construction Industry Scheme seeks to determine whether or not you’re ‘genuinely’ self-employed. However, this definition isn’t necessarily what we all think self-employment looks like. This is where SDC comes in: Supervision, Direction or Control.
If someone at your worksite can tell you how to carry out the work you do, organises how you spend your time, or can move you on to a different task (whether they actually do it or not), it likely means that you work under SDC and therefore are not classed as self-employed and can’t register for the scheme.
At Danbro, we ask a series of simple questions that will determine if you would be classed as self-employed. These are defined by HMRC, and will, therefore, determine your eligibility for CIS.
5. Are you already on an assignment that isn’t under CIS?
If you’ve already started a contract through an umbrella company, you’ll be classed as employed by that company. This means you’d fail the self-employment test for that particular assignment. However, once it has ended, you may be able to switch to CIS for your next assignment providing you qualify.
6. Which company do you want to use to facilitate your payments?
Once all that is decided, you just need to pick which company you want to work with.
Danbro’s fully-compliant CIS Solution will take care of all the necessary deductions, leaving you to do the job in hand. We’ll also cover you for Professional Indemnity Insurance and Public Liability Insurance, so you can get to work straight away!