If you work in the construction industry in the UK you’ll need to be familiar with the Construction Industry Scheme, or as it’s more commonly known, CIS.
In a nutshell, CIS is a set of rules related to the tax and national insurance of self-employed workers within the construction industry in the UK.
CIS primarily applies to construction but it can also be relevant in other industries such as repairs and truck driving. Therefore it is well worth speaking to a CIS accountant to find out whether or not you’ll need to register for the scheme.
How are you affected by CIS?
First things first, you need to register for CIS. The process is relatively straightforward and all you need to do is follow a few simple steps on the HMRC website.
At the core of CIS is determining whether you are a contractor or subcontractor as the two are treated slightly differently. Truckers in the UK can fall into both these categories so it is essential that you speak to an accountant to ensure that you register correctly.
- Contractors: If you are deemed to be a contractor under CIS you’ll need to verify any subcontractors that you work with who you haven’t included on a CIS return in the past two years. You’ll then be required to deduct certain amounts for tax payments from their fee. Contractors are any business spending in excess of £1million each year on construction.
- Subcontractors: Subcontractors will have their CIS tax deductions made for them by contractors. You need to keep track of these deductions, as they will be included on your Self-Assessment Tax Return.
If you are a PAYE employee in the construction industry you won’t need to register for the Construction Industry Scheme. CIS only applies to those who are self-employed within the construction industry.
Completing returns: Under CIS you’ll need to complete monthly returns and submit them to HMRC as this allows them to understand what payments have been made to contractors as part of the scheme.
Again, an accountant will be able to do all this for you but you can ultimately submit your returns in one of two ways. The most popular is to do it electronically through the Government Gateway, or the other option is to submit a paper return.
It is always recommended that you submit your returns electronically. It’s much more straightforward and it’s far less likely that there will be any admin or postal errors.
Working as tax efficiently as possible under CIS:
No matter what, you always want to be trading in the most tax efficient way possible. Nobody wants to pay more tax than they need so it is well worth doing some research to find out how you can work more tax efficiently and only ever pay the tax you need.
As a trucker you are bound to claim a few expenses. You could be responsible for maintaining your vehicle and filling it up with fuel, as well as paying fees for certain licenses that you are required to hold.
These expenses can be offset against your revenue and ultimately lower your overall tax liability. Remember that you only pay tax on your profits, so revenue less expenditure. Consequently it is essential that you are fully aware of all the expenses that you can claim.
If you aren’t sure about what expenses you can claim your accountant will be able to give you a clearer view. However the rule tends to be that as long as an expense is wholly, exclusively and necessary for business purposes it can be claimed; so you can’t put your weekly supermarket shop through if you are working as a trucker.
You should now have a clearer understanding of CIS and how it applies to truckers. It’s easy to feel intimidated by complex tax jargon so make sure you seek advice from an accountant, they’ll be able to lift a great weight off your shoulders and manage all of your CIS needs.
*Written by James Timpson:
“Hi, I’m James and I hold a big interest in the automotive field, especially with trucks. I have been writing in the industry for many years and I try and engage with my readers as much as possible.”