When you are working in the construction (building) industry, it is important to know whether you are working for yourself (self-employed) or for someone else (employed). It will affect how you pay tax.
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.
If you're a contractor under the CIS there are certain rules you'll need to follow. For example, you have to tell HMRC each month about all the payments you have made to your subcontractors within the scheme. You do this by making a monthly return.
To help HMRC check you are making your monthly returns correctly you are expected to keep records of your payments to subcontractors. You have to keep these records for a certain length of time so that HMRC can check them when it needs to.
Depending upon which CIS tax category your subcontractors fall under, 20%, 30% or Gross CIS, this will determine how the AVERT CIS Invoicing and Tax software will tax the CIS tax. All CIS excluding Gross CIS should be paid to HMRC within 14 days of the following month and our software will reflect the tax deducted in the candidate’s Tax Summary report and end of tax year self-assessment report.
We have added a feature to the AVERT CIS Invoicing and Tax software that will allow you to provide each subcontractor a receipt for CIS taxes that you deduct. HMRC stipulates that if you register directly with them and pay the subcontractors CIS taxes, you are obligated to provide each subcontractor a receipt confirming CIS tax deductions made. The AVERT CIS software will automatically produce this for you.
No one likes doing a tax return but it must be done. AVERT CIS Invoicing and Tax software will guarantee to take this stress away from you and, no matter where you are in the world, our software is accessible 24/7.
The AVERT CIS Invoicing & Tax software has been designed as a multi-layer platform so CIS taxes can be calculated and the relevant parties are updated within the software. If the contractor preferred to outsource the CIS then our software would allow third-party businesses such as accountants, invoicing service providers and employment agencies to provide timesheets, invoicing and CIS tax services.
If you are a UK contractor who hires or sub-contracts self-employed sub-contractors who are regulated by HMRC CIS, then our software will automatically calculate the CIS taxes for you so when you come to pay each sub-contractor their pay, the software will inform you what to retain and the CIS Management Tool will let you know any time during that month what CIS taxes you will need to pay the HMRC.
If you are a UK employment agency who places self-employed contract workers into work and who are regulated by HMRC CIS, then our software will automatically calculate the CIS taxes for every contractor you sign-up to your agency software.
The software would also give you a breakdown per contractor and their contract workers what to pay HMRC. When you create invoices on behalf of your contractor, you can instruct the contractor by the invoice only to pay you the monies less the CIS taxes or, if you are registered to pay the CIS taxes, then the contractor pays you the full amount and you pay the taxes to HMRC.
If you are charging the contractor or the contract worker any management or placement fees, our software will automatically calculate these costs when you come to pay each contractor worker.
As the invoicing and tax software has multi-layers, you can give each contractor permission to access your software, they would be able to view which contract workers you have placed in their business premises, view and approve timesheets, view and approve invoices, and make invoice payments. If you instruct the contractor to pay the CIS taxes, the contractor can view this when they login.
AVERT CIS Invoicing and Tax software will allow accountants to provide their clients with two key services. The accountant can act like an employment agency and manage the Invoicing services right through to paying HMRC their taxes or provide the software and, when a VAT or tax returns are due, login to the software and process this for their client. Many accountants have advanced accountancy software and many clients will not know how to use this technology or afford the licence fee and then the data has to be synchronised with the accountant’s software. Our CIS software displays data in real-time and once the accountant has completed the VAT/TAX return, they can either use our software for all self- employment or export the data into their software.
No need to use a calculator or spread sheet again when you sign-up to our software.
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