CIS applies to most workers in the construction industry. If you are a contractor you will need to deduct CIS tax from your subcontractors and submit CIS Returns to HMRC. If you are a subcontractor you will need to complete a tax return and claim your CIS refund.
CIS For Contractors
If you are a contractor within the construction industry then you will have to submit a CIS Return before the 19th of each month. A CIS tax return lets HMRC know how much CIS tax you have deducted from your sub-contractors and therefore how much you owe to them.
Unfortunately the penalties for late submissions are high. If it is one day late the penalty is £100 and if it is more than 2 months late a further £200 is payable with further penalties the longer it remains un-submitted. This is why it is very important that you put in place arrangements either yourself or for a professional to complete your CIS Returns on your behalf.
CIS For Subcontractors
If you are a sub-contractor in the construction industry you are required to complete a personal tax return each year. The tax return tells HMRC how much you have earned, how much expenditure you have incurred and how much CIS tax you have already paid.
As a sub-contractor it is likely you are entitled to a tax refund each year as you will have paid more in CIS tax than you owe to HMRC.
Learn more about the CIS Scheme in our resource hub.
