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Construction Industry Scheme (CIS)

Introduction

Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC).

The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Contractors must register for the scheme. Subcontractors do not have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

Who counts as a contractor or subcontractor

Register as a contractor if either:

  • you pay subcontractors for construction work
  • your business does not do construction work but you have spent more than £3 million on construction in the 12 months since you made your first payment

Register as a subcontractor if you do construction work for a contractor.

Work covered by CIS

CIS covers most construction work to:

  • a permanent or temporary building or structure
  • civil engineering work like roads and bridges

For the purpose of CIS, construction work includes:

  • preparing the site – for example, laying foundations and providing access works
  • demolition and dismantling
  • building work
  • alterations, repairs and decorating
  • installing systems for heating, lighting, power, water and ventilation
  • cleaning the inside of buildings after construction work

Exceptions

You do not have to register if you only do certain jobs, including:

  • architecture and surveying
  • scaffolding hire (with no labour)
  • carpet fitting
  • making materials used in construction including plant and machinery
  • delivering materials
  • work on construction sites that’s clearly not construction – for example, running a canteen or site facilities

Zahara and CIS

Zahara supports CIS by utilising your accounting package’s CIS module. As Zahara typically mimics a user entering an invoice, the same logic that your accounting package uses is still applied. This means that you don’t need to worry about losing any features.

When adding an invoice into Zahara, you simply need to ensure that the valid combination of coding is used to trigger your accounting package’s CIS module. These include:

  • Subcontractor Supplier Account
  • Nominal Code
  • Tax Rate

When the invoice is exported, the existing CIS module in your accounting package will take over, including the amounts in any reports that you already have available.

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