Frequently Asked Questions
What is the Construction Industry Scheme?
CIS is the acronym for The Construction Industry Scheme. It is a simple way of HMRC collecting tax from self-employed subcontractors, who work in the construction industry. This tax is mandatory and it is charged at 20% for subcontractors who are CIS registered, and 30% who are not.
When do I pay CIS tax?
This tax is paid on all payments throughout the tax year. This effectively serves as an advance payment towards your annual income tax. However, most subcontractors are due a tax rebate at the end of the tax year, due to expenses being claimed back. If you want to find our more, take a look at our sister company Brian Alfred who specialise in tax rebates.
What does CIS apply to?
CIS applies to payments by a contractor to a ‘subcontractor’. In this case, the subcontractor is the person receiving payments for the provision of construction work. This includes most work in the construction industry. This can include:
- Site preparation (i.e. laying foundations and providing access works)
- Demolition and dismantling
- Building work
- Alterations, repairs and decorating
- System installation for heating, lighting, power, water ventilation
What doesn’t CIS apply to?
There are some exceptions where you don’t need to register. This would be if you only did certain jobs such as:
- Cleaning the inside of buildings following construction work
- Architecture and surveying
- Scaffolding hire (without labour)
- Carpet fitting
- Making materials used in construction (including plant and machinery)
- Delivering materials
- Any other work on construction sites that wouldn’t be deemed as construction (i.e. running a canteen)
How does Parasol CIS work?
We’ll ensure compliance by conducting a self-employment check on all your assignments. This will determine your self-employment status and confirm that Parasol CIS is the right solution for you. We’ll invoice your agency or end client on your behalf and once these funds are paid, we’ll make any necessary tax deductions (and take a small margin) and then pay the remaining earnings to you.
Our process ensures you’re paid quickly and compliantly. You would still be responsible for filing a self-assessment to pay any remaining tax (or receive a rebate), but we can offer a discounted tax return via our sister company Brian Alfred.
What happens if my assignment falls under Supervision, Direction and Control (SDC)?
Don’t worry. If you are subject to SDC, we’re still here to support you. For this assignment you can become an employee of Parasol. Parasol will have a contract with your agency and you’ll have a contract of employment with Parasol.
We’ll invoice your agency and process your pay including tax and NI contributions, taking away the hassle and making sure you’re fully compliant.
Is insurance cover included?
Yes, we include Professional Indemnity (£5m cover) and Public Liability (£5m) insurance. If you became an employee of Parasol, we also hold Employer’s Liability insurance (£10m).