Construction Industry Scheme (tax for the self-employed working in construction)

Plainly the Construction Industry Scheme doesn’t apply to too many Bectu members (I’d need to get advice on how it could apply to people in set construction by my early guess is that it wouldn’t), but we need to know about it when thinking about the whole freelance tax/employment rights deal.

Through the CIS, a deduction is taken immediately when one is paid to a subcontractor, and those deductions count as advance payments towards the subcontractor’s tax and National Insurance. Ultimately, as far as I can see, it shouldn’t affect the amount of tax that is paid, but it does affect when it’s paid.

From the LITRG website:

“The CIS is a HMRC scheme which applies if you work for a contractor in the construction industry but not as an employee, so for example as a self-employed individual. The CIS rules mean that the contractor is usually obliged to withhold tax on its payments to you, at either 20% if you are ‘registered’ or 30% if you are not.

This is different from other self-employed individuals not within the construction industry, who normally receive their payments gross, which means no tax is deducted.”

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