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Top Tax Tips For The Construction Sector

Wednesday 26 August 2020

Written by Kulraj Bansal

Top Tax Tips For The Construction Sector

Top Tax Tips For The Construction Sector 

We all know the world of tax is a minefield, and businesses in any industry that don’t regularly review their finances run the risk of being either non-compliant or paying more tax than they need to.  The following tips have been prepared to help you be rest assured that your Construction business is running as tax efficiently as possible.

  • You must register as a contractor with the Construction Industry Scheme (CIS) if: you pay subcontractors to do construction work or your business does not do construction work but you usually spend more than £1 million a year on construction.
  • The Construction Industry Scheme covers most construction work to buildings, decoration and refurbishment. 
  • If your business is construction and you pay subcontractors for construction, you’re a ‘mainstream’ contractor. This applies if you are a builder, labour agency or property developer. 
  • You count as a ‘deemed’ contractor if your business does not do construction however you spend an average of more than £1million a year on construction. 
  • Before you pay a new subcontractor, you will need to ‘verify’ them with HMRC. HMRC can tell you if they are registered for CIS and what rate of deduction to use or if you can pay them without making deductions.
  • The CIS deduction rates are as follows:
    • 20% for registered subcontractors
    • 30% for unregistered subcontractors
    • 0% if the subcontractor has ‘gross payment’ status 
  • You must pay HMRC any deductions you have made. HMRC will setup a CIS payment scheme for you when you register as a contractor.  The payments to HMRC must be made every month by the 22nd or 19th if paying by post. 
  • You must notify HMRC each month about the payments you have made to subcontractors through your monthly return.

If you would like to speak to one of our property tax specialists, please don’t hesitate to get in touch. 

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