CIS Payroll Glossary
When choosing CIS as your payroll model, there are lots of abbreviations and terms to take note of. They can be confusing so we have collated a list of CIS terminology for you to refer to whenever you need it.
CIS stands for the Construction Industry Scheme, a scheme introduced by HMRC (His Majesty’s Revenue and Customs) to prevent tax evasion in the construction industry. The scheme is used by contractors and subcontractors to manage their tax obligations, ensuring compliance with HMRC regulations.
A contractor is a business or individual who hires subcontractors to complete work in the construction industry. Contractors are responsible for deducting and submitting CIS payments to HMRC.
Material Costs are expenses for materials that can be deducted from the total payment before applying the CIS deduction percentage, thereby reducing the amount subject to deduction.
Subcontractors who do not meet the criteria for gross payment status receive payments with CIS deductions, known as having net status.
The scheme rate is the percentage at which CIS deductions are made, determined based on the subcontractor’s tax status. The standard rates are 20% for registered subcontractors and 30% for those who are not registered.
A subcontractor is a person or business hired by a contractor to perform specific tasks within a construction project. Subcontractors are subject to CIS deductions unless they have gross payment status.
Tax treatment refers to how payments made under the CIS are treated for tax purposes, including deductions and submissions to HMRC.
