Be aware of your obligations when using subcontractors

A subcontractor is usually defined as a business or a person that does work for a larger company as part of a building project.

They carry out work that the contractor can’t perform, but remains responsible for, while the subcontractor provides his or her services under a contract for service.

If you work for a contractor, you must be on top of your obligations under the Government’s Construction Industry Scheme (CIS).

The contractor is responsible for deducting money from the subbie’s pay and making the necessary payments to the taxman.

What does being a subcontractor mean?

You must register as a subcontractor for the CIS if you conduct work for a contractor and are either a sole trader, own a limited company, or are a partner in a partnership or trust.

Conversely, if you are classed as an employee, you do not need to register for the CIS.

Where you can register

If you are a sole trader, you can register online using the Government Gateway, or you can register using an online form.

If you need to register, you should get prepared by gathering the following information:

  • Your National Insurance number
  • Your legal business name/trading name
  • The business’s unique taxpayer reference number (UTR)
  • The VAT registration number (if applicable)

What is gross payment status?

Gross payment status allows for you to be paid in full, without contractors deducting money under the CIS.

To be eligible for this, you should have paid National Insurance contributions on time previously and you must be able to prove that your business does construction work in the UK. The business’s finances should also be run through a bank account.

Additional requirements are that the business’s annual turnover is at least £30,000, if you are a sole trader.

For partnerships and companies, turnover should be at least £100,000 as a whole, or £30,000 for each partner/director.

However, this does not mean that you are exempt from paying tax. When you complete either your Self Assessment tax return (if you are a sole trader or partner) or your Corporation Tax return (if you own a limited company), these payments must be declared as income.

If you need help or advice on CIS matters, please contact our expert team today.

Business right caret

Small business confidence dips ahead of new customs controls coming into force

Four in 10 exporters have reported a fall in international sales since the end of the Brexit transition period, a major study has revealed. According to the tracker, four in 10 – around 41 per cent of traders – have reported a “drop off” in international sales in the three months to September 2021.


Large number of businesses looking to recruit more staff

It is perhaps a sign of confidence returning to the UK economy that a significant number of British businesses believe they will be recruiting staff over the coming year.


Spring Statement 2022 summary

Mr Sunak found himself addressing MPs against a background of crisis, with the residual impact of COVID, the invasion of Ukraine and the cost-of-living crisis all affecting the economy in different ways.


Compliance right caret

HMRC asks sole traders to correctly report SEISS grants or “repay in full”

Sole traders who have not correctly reported their Self Employment Income Support Scheme (SEISS) grants may be forced to repay them in full, it has been warned.


Making Tax Digital – what you need to know ahead of 2022-23

From April 2022 all VAT-registered businesses need to comply with MTD for VAT. MTD applies to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000


Real-time online sanctions tracker to assist importers and exporters

Any business involved in international trade, whether importing, exporting or part of the supply chain supply to those firms, is faced with a rapidly changing regulatory environment.


Economy right caret

Small businesses call for Government support to tackle climate change

According to new research, many are addressing energy usage, increasing recycling and investing in microgeneration, but only a third of those have a formal plan to tackle climate change within their business.


Hospitality bosses develop new strategies to cope with staff shortages

Hospitality business owners have responded positively to the staff shortages caused by the pandemic, by increasing wages and implementing improved staff retention strategies.


Everything you need to know about the new WTO Services Domestic Regulation

New World Trade Organisation (WTO) rules are set to cut the cost of global trade by billions of pounds every year, it has been announced.


Tax Planning right caret

Almost 800,000 tax scams reported to HMRC in past 12 months, figures reveal

Nearly 800,000 tax-related scams were reported to HM Revenue & Customs (HMRC) in the past 12 months, a major study has revealed. According to the report, HMRC responded to 797,010 referrals of suspicious contact from the public in the last year. Around 358,000 of these involved scams where taxpayers were offered bogus tax rebates.

Tax Planning

Be aware of tax liabilities if you are using cryptocurrencies

For those who have dabbled in the market, its important for them to understand that there may be tax liabilities with Captial Gains Tax and Income Tax, with any transactions whether with currency or other crypto assets.

Tax Planning

Did you use a Bounce Back Loan to cover personal expenses during the pandemic? Act now to avoid tax consequences

If you received a Bounce Back Loan (BBL) during the coronavirus pandemic and took the cash as drawings, there may be additional tax consequences.

Tax Planning