Construction Industry Scheme (CIS)
Recruitment is a fundamental part of all construction projects, but as a Recruitment Agency placing workers into the construction industry, you will be affected by the Construction Industry Scheme (CIS).
Within the Construction Industry Scheme (CIS), unless you have achieved gross CIS status, contractors will deduct 20% of your invoice value for payment to HMRC. The deductions count as advance payments towards your tax and National Insurance contributions. As a subcontractor, if you are not registered for the scheme, contractors will deduct 30% from your payments instead
If you are a start-up agency, or at pre-start
Contractor or subcontractor?
In CIS terms usually, the construction company managing the construction project is the contractor and the self-employed worker is the subcontractor. As the Recruitment Agency placing the self-employed worker, you’ll act as both contractor and subcontractor, so you’ll need to register for CIS as both.
What is gross payment status?
As a business, once you have
QUALIFYING FOR GROSS PAYMENT STATUS
To qualify you must show HMRC that:
- you’ve paid your tax and National Insurance on time in the past
- your business does construction work (or provides labour for it) in the UK
- your business is run through a bank account
HMRC will look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least:
- £30,000 if you’re a sole trader
- £30,000 for each partner in a partnership, or at least £100,000 for the whole partnership
- £30,000 for each director of a company, or at least £100,000 for the whole company
If your company is controlled by five people or fewer, it must have an annual turnover greater than £30,000 per director..