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21
Feb

CIS – New Scheme

CIS – New Scheme

The new CIS scheme sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry (hence Construction Industry Scheme).

Under the new scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status as determined by HM Revenue & Customs. This may require the contractor to make a deduction, which they then pay to us, from that part of the payment that does not represent the cost of materials incurred by the subcontractor.

As of 6 April 2007 a New Construction Industry Scheme started. Its aims are:

1. to reduce the regulatory burden of the Scheme on construction businesses
2. to improve the level of compliance by construction businesses with their tax obligations
3. to help construction businesses to get the employment status of their workers right.

CIS New Scheme Commencement Date

The commencement date for the new Construction Industry Scheme was 6 April 2007. The deduction rates for the new scheme are 20% for subcontractors registered with HMRC for payment under deduction and 30% for those not registered.


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