The number of construction operatives paid through the Construction Industry Scheme (CIS) has risen by 18% since 2014, according to the latest figures.
Statistics received through a Freedom of Information request to HM Revenue and Customs (HMRC), confirmed that 1.12 million construction operatives, 49% of all construction personnel in the UK, were paid through CIS in 2017/2018.
Growth in self-employment
The number of operatives working under CIS increased by 4% in the last year alone, representing a growing desire for people to take more control of their working lives. Self-employment means greater freedom for lots of people, giving them a choice to determine how, where and when they work.
While self-employed operatives in the construction industry don't get employee benefits like statutory holiday pay, there are many other benefits, including business expenses that can be claimed back at the end of the year through their Self Assessment tax return.
For more information about what can be claimed, make sure you take a look at our FREE business expense guide.
CIS subcontractors are far more likely to receive a tax refund than people who are paid through ‘pay as you earn’ (PAYE). It's a common misconception in the industry that tax returns can be scary, but that doesn't need to be the case. Using a professional tax service to support with the submission of an annual Self Assessment can take away the stress and worry of working out what somebody can and can't include. Better still, they'll help make sure nothing gets missed so you can claim back the right amount at the end of the year.
What is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme is a tax deduction scheme, which involves contractors withholding a percentage on any payments made to sub-contractors. This money is paid directly to HMRC by the contractor to be offset against the sub-contractor’s tax and National Insurance bill. The percentage of tax deducted will depend on the status of the individual, and their eligibility against specific rules.
If a subcontractor isn't eligible for gross payments, they have the option to register with HMRC for 20% deductions. If they choose not to, they'll be enrolled on the higher rate of 30%.
CIS applies specifically to certain aspects of work carried out in either permanent or temporary buildings and civil engineering work on structures such as roads and bridges for example.
These tasks include things like:
- Laying foundations and providing access works
- Demolition and dismantling
- Building work
- Alterations, repairs and decorating
- Installing heating, lighting, power, water and ventilation systems
- Cleaning the inside of buildings after construction work
For more information on the Construction Industry Scheme, go to https://www.gov.uk/what-is-the-construction-industry-scheme.