Construction Industry Scheme (CIS)

toozie_2

We had some great info on here a while ago about a business bank account- thank you.

My hubby is soon to be leaving a specialist job in the construction industry – semi retirement. He only wants to work about 2 says a week in future. We have virtually set everything up for him to become self employed. He may go back to the company he worked for or he may work for a couple of others, or he may do a wagon driving job for another firm (non construction industry based)

He is more than happy and capable to do his own accounting, and pay tax (if he earns enough) annually.

Someone has now said he HAS to go through CIS with some companies as a sub- contractor so the deductions are made from the invoice he puts in and paid directly to HMRC.

Because the 8 – 10 days a month he may work will be varied, possibly the same thing as he has done for 30 years or something totally different we’d rather continue as we had originally decided.

Does anyone have any experience of the CIS scheme please? Are there any benefits of this- apart from not having to think about setting money aside to pay tax & NI?

Thank you

comeandgo

No benefits, it is a requirement set by HMRC that a construction sub contractor can not be paid unless they have a CIS certificate .  The certificate let’s the main contractor know the rate of tax to deduct from the payment to the sub contractor, it may be 30% or. 20% or nothing.  Your husband has to start the ball rolling by getting his certificate from HMRC as sometimes the main contractor will wait until the sub contractor is chasing payment to tell them we can’t pay you as you have no certificate.  

When your husband completes his first tax year and submits his self assessment he may get a repayment of overpaid tax or it may be kept as first payment towards the next years tax.

toozie_2

Ohh! I couldn't see anywhere that it was complulsory! Reading HMRC it's going to be hard to get the tax set as zero because it seems he has to have a turnover of £30K, or a good record of paying taxc on time. He has always been an employee until now so deducations are made at source.
So it could mean the contactor deducts 30% and we'd have to wait a year to have this refunded if he only made a profit of £12500 in the tax year? 
So with regard to the self assement- how does he account for the work under CIS and the work thats not under CIS?
Sorry for all the questions!