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WHAT IS THE CONSTRUCTION INDUSTRY SCHEME?

The Construction Industry Scheme (CIS for short) is a tax deduction scheme that can help sub-contractors in the construction industry pay less tax. In simple terms, it involves tax being deducted at source from payments related to construction work. It is important to note that employees cannot be covered by this scheme due to them being part of the PAYE system already for tax purposes.

The Construction Industry Scheme applies to payments from the main contractor to the sub-contractor. There are three tests the sub-contractor must pass in relation to turnover, business and compliance along with registering with HMRC officially. If all this is done, the sub-contractor will receive gross payments from the contractor.

Even if the three tests are not passed, the sub-contractor can still register with the HMRC for CIS payments but at a lower level of 20% rather than purely gross payments. This is still lower than the usual 30% though and so worthwhile for many sub-contractors.

The Construction Industry Scheme payments apply for any payments made under a construction contract and is relevant where one party is the contractor and the other the sub-contractor. It is also important to remember that some payments are exempt from the Construction Industry Scheme guidelines. A simple example of this is that of a business that is not in the construction business but pays for building work on a property it owns and uses for their own business purposes. This would not be eligible to make a CIS payment against under the rules of the Construction Industry Scheme.

If you need an accountant Melton Mowbray or need more advice on the CIS then get in touch today and let us help you with your query. Our professional team is on hand for any help or advice you might need.

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WHAT YOU NEED TO KNOW ABOUT INCOME TAX

Income tax can be very taxing for many people. Many people find it quite difficult to understand how income tax is calculated, what the various tax codes mean, who is required to pay income tax and so on and so forth. What is clear though, is that Her Majesty’s Revenue and Customs (HMRC) can come after you if you unlawfully pay less tax than you are required to pay, which is one good reason to get it right.

Below we cover the essential aspects of income tax.

What is income tax?

Income tax is tax you pay on earnings you receive. These earnings could either be income you receive from your employment, pension, some savings, rental income or profits you make from self-employment, to mention a few.

How much income tax is payable?

This depends on your tax bracket.

For the 2017/2018 tax year, the first £11,500 of earnings is a tax free personal allowance.

All other earnings above £11,500 will be charged at the following rates:

• Basic rate of 20% on earnings from £11,500 to £33,500
• Higher rate of 40% on earnings from £33,500 to £150,000
• Additional rate of 45% on all earnings in excess of £150,000

How is income tax paid in the UK?

• Your employer deducts income tax from your wages using the Pay As You Earn (PAYE) system before paying your wages to you, or;

• You file a self-assessment tax return to HMRC. HMRC calculates what you owe based on the information you provide in the self-assessment. People with complex tax arrangements or those who are self-employed usually use the self assessment procedure.

As accountants in Melton Mowbray we can offer the full range of accountancy services to individuals and businesses in the area. Contact us today.

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