Starting a new business? Get 40% off our accountancy services for 3 months! 😀

x

Subcontractors who are working for a contractor under the Construction Industry Scheme should ensure they are registered with HM Revenue & Customs, as this may affect the amount of tax deducted from gross payments made to them. A contractor is responsible for informing HMRC each month of gross payments made to subcontractors and deductions which are made.

A subcontractor has to be verified by HMRC using the Unique Taxpayer Reference number, National Insurance HMRC Advicenumber and name of the business or individual, including any partners if the business is a partnership. Subcontractors receive payment from a contractor, either gross or under deduction. If a subcontractor is paid gross, this is without any deductions being made, and tax and National Insurance should be accounted for on the Self Assessment tax return.

If a subcontractor is paid under deduction, tax will be deducted at the current rate of 20 percent before payment is made to the subcontractor. The deductions are paid to HMRC by the contractor. There are strict criteria under CIS, to decide who may be paid gross which contractors must comply with. If a subcontractor isn’t registered for CIS or cannot be verified by the contractor, tax will be deducted at the higher rate of 30 percent.

At the end of each year, subcontractors must complete and return a Self Assessment tax return. Any deductions which have been made will be set against the tax and National Insurance that you owe. If you have already paid more than is owed, you will receive a repayment of tax from HMRC.

guest
0 Comments
Inline Feedbacks
View all comments

Read more posts...

Architects and Tax

Architecture is a highly diverse sector when it comes to tax. It’s partly down to the type of businesses that carry out…

Read More

June 2022 Client of the Month: Manea Kella

This month we spoke to Adrian Manea, architect and director at Manea Kella, a London based RIBA Chartered architecture and interior design…

Read More

Succession Planning for Business Owners: What Comes Next?

When you own a business, it’s extremely normal to feel like you’re surviving one day to the next – ‘winging it’, as…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.

Bookkeeping

You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?

Yes
No

Call us on 020 3355 4047 if you’re not sure.