Construction Industry Scheme
What is CIS?
The Construction Industry Scheme (CIS) allows subcontractors to make regular contributions towards their national insurance and pay their taxes. Under CIS, contractors working in the construction industry deduct money from subcontractor’s invoices and pass it on to HMRC. This deduction is considered as an advance payment towards the subcontractor’s tax and National Insurance. Learn more about what’s covered under CIS from the UK Government’s website.
Who Should Register for CIS?
If you’re a contractor involved in construction business in the UK, it is mandatory that you register for CIS. It is not compulsory for subcontractors to be registered for CIS, however, deductions are taken from your payments at a higher rate if you are not registered.
Enable CIS
Warning: You cannot disable CIS in your organisation after you create a transaction under CIS. You can disable CIS only after you delete all transactions under CIS.
Enabling CIS lets you deduct money for services covered under CIS in transactions. Setting up CIS in Zoho Procurement is easy and can be done in a few clicks. Here’s how:
- Go to Settings in the top right corner of the page.
- Click Taxes under Taxes & Compliance.
- In the Taxes pane, click Construction Industry Scheme.
- Click the Let’s Get Started button.
- Click the toggle next to Do you want to track CIS on transactions? to enable CIS in your organisation.
- Enter the necessary details in the fields below.
| Field | Description |
|---|---|
| CIS Role | Select Contractor if your organisation hires other businesses for construction work. |
| Unique Taxpayer Reference | Enter your Unique Taxpayer Reference Number. |
| National Insurance Number | Enter your National Insurance Number. |
- Click Save.
Add Subcontractors
Contractors can add subcontractors as vendors to bill them for their services. This allows you to manage all their transactions and payments with ease. Here’s how:
- Click the Vendors module on the left sidebar.
- Click + New in the top-right corner.
- Fill in the required details.
- In the Other Details section, check the Enable CIS tracking for this Subcontractor option.
- Enter the UTR and National Insurance Number.
- If you are a contractor who is adding a subcontractor as your vendor, select the CIS Deduction Rate from the dropdown menu
- Click Save.
CIS in Transactions
Prerequisite: CIS tracking must be enabled for the vendor if you want to create transactions under CIS for them.
When you send a bill to your subcontractor, you can choose the services for which you deduct the amount on their behalf. Here’s how:
- Click the Vendors module on the left sidebar.
- Click + New in the top-right corner.
- After filling in the necessary details, check the Covered by CIS? option if a service comes under CIS. Zoho Procurement will automatically calculate the deductions using the CIS Deduction rate that you provided when adding a subcontractor as a vendor for the services you choose.