CIS stands for Construction Industry Scheme, which contains rules set out by HMRC on how subcontractors working within the construction industry should be paid. Keep track of your VAT and generate reports to gain perspective on your accounting year.
How do I check if a customer is CIS registered?
When paying a subcontractor you will need to ‘verify’ them with HMRC to check that they are registered under CIS and what their payment status is. Subcontractors can be verified using HMRC’s CIS online services or calling HMRC’s CIS Helpline.
Is it a legal requirement to be CIS registered?
Contractors must register for the scheme. Subcontractors do not have to register, but deductions are taken from their payments at a higher rate if they’re not registered. If you’re already registered as a contractor, you can sign in to CIS online to file your monthly returns or to verify a subcontractor.
Do you need to include cis in your invoice?
If you qualify for gross payment status, the contractor you work for doesn’t need to make deductions from your pay, so it isn’t necessary to add information about CIS to your invoices. However, if you use either the 20 or 30% rate, you need to make sure that your invoice templates include:
Do you have to pay VAT on a cis?
VAT is charged at the standard rate of 20% and is applicable to both labour and materials. 20% of 2,000 is 400, so you add £400 to the subtotal before VAT. CIS is only applicable to the labour fee before tax; as you are registered for CIS, deductions are taken at 20%. 20% of 800 is 160, so you deduct £160 from the total amount after VAT.
How much does a customer need to pay for CIS?
Your customer must pay a total of £2,240. It’s up to you whether you want to use gross or net pricing, but either way, it is important to clearly indicate the amount of VAT due, the amount of CIS deducted, and the total amount that your customer needs to pay.
When to post the cis element to the account?
ShirleyM you would be better to post the cis element to the cis account on the same date as the payment comes in as the invoice date isn’t relevant to the monthly returns.
