Are you paid under CIS? If so, you might be wondering what a CIS statement is.
In this quickfire guide, we’ll run through everything you need to know about this important document that you’ll receive from the firm you work for.
What is the CIS?
The Construction Industry Scheme (CIS) is an initiative introduced by HMRC to ensure the tax compliance of self-employed construction workers and to minimise tax evasion.
Under CIS, employers will make deductions of either 20% or 30% from the worker’s pay which go towards their Income Tax and National Insurance (NI) Contributions liabilities for the year.
At the end of the year, the worker is required to submit a Self Assessment Tax Return and so calculate their total tax and NI liabilities due. If the CIS deductions made are less than what is due for the year, the remainder will be due for payment. If the CIS deductions exceed the liabilities, however, then a rebate may be due.
What is a CIS statement?
In the simplest of terms, a CIS statement is written proof of the tax deductions made by a contractor, who will send this every time you’re paid.
What’s included on a CIS tax statement?
Also known as a CIS payment and deduction statement, it’ll include a breakdown of the following:
- Contractor’s details
- Subcontractor’s details
- Subcontractor’s Unique Taxpayer Reference (UTR)
- Verification number (for CIS deductions based on the higher tax rate)
- Gross pay
- CIS tax deduction amount
- Business materials
There is no set format for a CIS payment and deduction statement however, they must contain certain information as a minimum.
Why do CIS statements matter?
Other than it being a legal requirement for a contractor to send all subcontractors working under this scheme a CIS deduction statement when paying them, it’s also important that workers themselves keep hold of them.
Not only will they prove useful if HMRC enquires into your tax compliance, but they’ll also be reviewed as part of any CIS tax refund process. Having them to hand could speed up any potential tax rebate you might be owed.
When are CIS payment and deduction statements issued?
Your employer needs to issue a CIS statement (typically via email) to anyone paid under CIS within 14 days of each tax month end. But given the tax month finishes on the 5th of each month, rather than the 30th or 31st for example, your CIS statement won’t always coincide with your payslip.
Speak to an expert
To learn more about the CIS and to find out if you’re due a tax refund, please request a callback and one of our friendly experts will be in touch.
