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CIS Scheme Changes (Construction Industry Scheme)

The government has recently updated the CIS scheme - (Construction Industry Scheme) for contractors and subcontractors in the construction industry.

The legislation changes came into force for payments made on or after 6 April 2007 and as a result construction industry subcontractors and contractors have a different set of rules that now need to be complied with. So what was the old scheme and how has it changed?

The old CIS (Construction Industry Scheme) requirements before 6 April 2007

Previously with the CIS scheme contractors and subcontractors in the construction industry there were 3 main documents (the CIS4 card, CIS5 or CIS6 certificate) used by the industry to prove that contractors and subcontractors were registered with HMRC and also to make sure that the correct Industry Scheme was applied to a subcontractor's labour.

CIS4 Card - When registered with this document the subcontractor billed the main contractor but the contractor then only paid the subcontractor 82% of the labour cost of the bill. The remainingg 18% was retained by the contractor for paying across to HMRC on behalf of the subcontractor. This was paid using paper based returns on a monthly basis (CIS23, CIS24 and CIS25) and an annual return (CIS36).

The subcontractor could then offset any payments made this way to HMRC against the final tax bill at the end of the tax year. The CIS4 card was largely for subcontractors that HMRC were not certain would meet their tax bill, for exanple, new businesses with no or little trading history.

Ayone registered with the CIS5 / CIS6 certificate was basically one step up from those registered with the CIS4 card in the eyes of the Revenue! They allowed contractors registered with this certificate to pay their subbie's labour bill in full and for the subbie to then deal with the annual tax in the usual way.

What's changed with the introduction of the NEW CIS (Construction Industry Scheme) from 6 April 2007?

Increase in the standard rate of tax deduction (for payments) from 18% to 20%.

The old Vouchers, Tax Certificates and registration certificates have been replaced with a UTR (Unique Tax payer Reference Number) that is verified via internet submissions to HMRC.

The annual return has been scrapped - Only monthly returns now required from contractors to be submitted via internet submissions to HMRC for payments made on or after 6 April 2007.

Contractors are also now required to issue all subcontractors with Payment Statement reports monthly.

CIS Scheme Changes and Sage CIS Software - The Solution!

OK, now you know how the CIS scheme has changed don't panic! - Sage, the UK's favourite accounting software provider have introduced a Sage 50 CIS module to plug into Sage Line 50.

Sage 50 CIS IS THE ideal solution for easy compliance with the new Construction Industry Scheme. At Site4 we can sell you the Sage 50 CIS software, Sage 50 Accounts 2010 software and provide you with assistance installing your software, on-site support, training etc.

Ready to buy? Yes. Click here to buy your Sage 50 CIS software now.

No. Click here if you want to know more about Sage 50 CIS software.

Want some help first or more info? Call us on 0800 043 7243.

We have years of experience working with the construction industry dealing both with accounts and IT systems in general. If you require help installing your Sage 50 CIS software, on-site support, training or any other assistance for your Sage products please contact us at Site4 as we will be happy to quote you. We can provide on-site services in Lancashire, Merseyside, Manchester and North Cheshire and further afield if required.