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There are special rules for some people who work in the construction industry. These are called the Construction Industry Scheme (CIS) rules. It is important to know if they apply to you.
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When you're working in the construction (building) industry, it's important to know whether you're working for yourself (self-employed) or for someone else (employed). It will affect how you pay tax.
You can find out whether you are employed or self-employed by following the link below.
If you work for someone else you are called an employee, and the person you work for is your employer.
If you work in the construction industry as an employee and your employer takes tax and National Insurance off your wages before they pay you, then CIS doesn't apply to you. You can find out more about the tax and National Insurance you will pay as an employee in our guide 'Working for someone else' below.
If you work for yourself in the construction industry you will probably come within the special rules called CIS. CIS covers most construction work in the UK.
You can find out if what you do is covered by CIS by following the link below.
If the type of work you do is covered by CIS you need to know whether you are:
If you are both a contractor and a subcontractor then:
If you are going to work as a subcontractor in the construction industry, you should:
There are different forms to complete to register with HMRC for tax and National Insurance purposes depending on your circumstances. For example you complete form CWF1 if you're a sole trader and form SA401 if you're a partner in a partnership. HMRC will use the information you provide to set up the right records for you. You'll be asked to complete a Self Assessment tax return to tell HMRC about your income and gains.
To find out about setting up a limited company, follow the link below. Once your company is registered, HMRC will contact you about paying Corporation Tax.
To register for CIS, call the CIS Helpline on Tel 0300 200 3210. If you're calling from abroad please call Tel + 44 161 930 8706. Lines are open from 8.00 am to 8.00 pm Monday to Friday, and from 8.00 am to 4.00 on Saturday. They are closed on a Sunday, bank holidays, Christmas Day, Boxing Day and New Year's Day.
For most subcontractors, money is usually taken from your payments each week or month by your contractor and paid to HMRC. This is called 'deductions'.
Then after the end of the tax year (5 April) you fill in a tax return. The information you put on the form tells HMRC if you owe more tax or if HMRC owes you a tax refund.
If you are a self-employed subcontractor you fill in a Self Assessment tax return.
If you have a limited company you fill in a Corporation Tax return.
If you are self-employed, any deductions which have been taken from your payments during the year can be used to reduce the tax and National Insurance you owe.
If you have a limited company, the deductions can be set off against the monthly payments the company has to make to HMRC for its employees or subcontractors.
Some subcontractors can be paid without any deductions taken off (which is called being paid 'gross'). You can only be paid gross if you pass special tests. If you are paid gross then you pay all of the tax you owe after you have filled in your tax return.
If you don't register for CIS before you start work, HMRC will tell your contractors to take much higher deductions than usual from your payments. So, make sure you register before you start.
See the links below for more information on being a CIS subcontractor and how to register.
If you work as a CIS contractor you need to:
To find out more about what you have to do see the link below.
If you have left or are about to leave the UK you must tell HMRC. If you're not required to fill in a tax return, you'll have to complete form P85 Leaving the UK - getting your tax right. HMRC will use the information on the form to send you any tax refund you're owed and work out if you'll become non-resident. It's important you enclose parts 2 and 3 of form P45 if you have one as HMRC will not be able to make any tax refund due without them. You'll need to send the original versions - photocopies won't be accepted.
If you're leaving the UK to work full-time abroad for a UK based employer for at least a complete tax year, you'll need to fill in a tax return as well as a form P85.
For help with CIS phone the CIS Helpline on Tel 0300 200 3210. Lines are open from 8.00 am to 8.00 pm Monday to Friday, from 8.00 am to 4.00 pm on a Saturday. They are closed Sunday, bank holidays, Christmas Day, Boxing Day and New Year's Day.
Or you can find out more by following the link below.