CIS Exemptions: What Are They and Who Qualifies?
The Construction Industry Scheme (CIS) requires tax to be deducted at source for construction industry work. The fee payer is responsible for deducting a flat rate of tax from subcontractors and passing it to HMRC. However, some exemptions mean CIS does not apply.
Who is exempt from CIS?
Before CIS is applied, each party must be satisfied that the work being carried out is a construction operation within the scope of the scheme.
If construction work falls under any of the following categories, a subcontractor will not need to register for CIS:
Scaffolding hire (not the labour itself)
Carpet fitting
Architecture and surveying
paid for by a charity or trust
paid for by a governing body or head teacher of a maintained school on behalf of the local education authority
on the subcontractor’s own property and worth less than £1,000 excluding materials - you must call the CIS helpline to get an exemption
CIS also does not apply if you’re a deemed contractor paying for:
work on property (that is not for sale or rent) for your own business use
a construction contract worth less than £1,000 excluding materials - you must call the CIS helpline to get an exemption.
What is exempt from CIS deduction?
Most payments made to subcontractors will be subject to CIS deduction, unless the subcontractor is verified for gross pay the amount is in respect of items which are considered exempt; these include:
Materials
Consumable stores
Fuel (for site equipment)
Plant hire
Manufacture or prefabrication of materials
For all expenses outside of the above categories, CIS deductions must be applied.
HMRC are active in this area, therefore reasonable care should be applied when processing expense payments.
Stonebridge are experts in all CIS matters. If you have any CIS related questions, please contact compliance@sbcontracting.co.uk, where we will be happy to assist.
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