CIS Mortgage

What Is The CIS Scheme?

We specialise in Mortgage Advice for Subcontractors paid via the Construction Industry Scheme (CIS)

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This guide is for companies that are involved in construction activities, and which may be required to register with HMRC as a subcontractor or contractor under the Construction Industry Scheme (CIS). Please remember that companies that have a high yearly spend on construction will be caught by the idea, even if their main area does not relate directly to construction operations.

What is the CIS Scheme?

The Construction Industry Scheme (CIS) is a deduction of the tax initiative. The idea is to prevent the much-perceived lack of ‘not following the rules’ that surrounds the construction world, by putting a framework in place to ensure that tax payments are made on behalf of construction workers in the UK.

What does the scheme apply to?

The focus is on payments for work. Payments only fall under this if they are made as part of a contract for building services; therefore the payment of employed workers through a PAYE scheme, would not necessitate CIS deductions.

For the scheme to apply, there will need to be one party to the contract which is noted as a contractor, and one company who acts as a subcontractor. There will also need to be construction operations as part of the contract.

Who is regarded as a contractor? A contractor is someone whose business engages subcontractors for construction purposes.

Because of the wide of the legislation, a wide variety of entities may be deemed to be contractors and if a business’ spend on construction exceeds £1,000,000 in a year, it will be deemed for the CIS to be a contractor, and will have the obligations that come with that.

It is paramountly important for companies to monitor their construction spending, to make sure that they are aware if they go over this threshold, and to meet the requirements to file returns under the Construction Industry Scheme.

The scheme only affects companies, however, so private householders would never fall into CIS.

If you think your company or business may meet the criteria of a contractor under Construction Industry Scheme, it is essential that you understand the rules.

Who is regarded a subcontractor?

A subcontractor is a person or business that receives payment for construction activities under a contract for services. A subcontractor will be the person or company who provided the construction activities, either by doing the work themselves, providing the people who will do the construction, or subcontract the work to another party.

What are regarded as construction activities? The definition of construction operations within the Construction Industry Scheme’s legislation goes beyond just the construction of houses and other things It also includes Alterations to buildings.

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If you’re reading this as a Construction Industry Scheme (CIS) contractor, then you or your partner are probably struggling to find a mortgage right now. We can help.

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