CIS Construction Payroll Outsourcing Guide - Just Payroll CIS Construction Payroll Outsourcing Guide - Just Payroll

Payroll outsourcing for construction companies

Jan 1020

Posted in Payroll

Payroll that keeps your construction business CIS compliant.

If you’re part of the construction industry, you’ll be more than familiar with the Construction Industry Scheme which has been evolving ever since its introduction back in 1972.

What was once a scheme largely targeted at overseas workers who were effectively enjoying a tax free wage has since become a rigorous process designed to ensure that everyone is paying the correct level of tax.

Am I covered by the CIS?

As you might expect, HMRC defines ‘construction’ in a way that includes building, roofing, groundworks and plastering. But it also includes many other services including:

  • Demolition
  • Scaffolding (erection and dismantling)
  • Plumbing
  • Electrical
  • Painting and decorating
  • Landscaping
  • Repairs, maintenance and extensions

It even includes tree planting when carried out as part of a building project.

If you contract workers in any of the above roles, you’re required to register and comply with the CIS. If you’re a sub-contractor, you don’t have to register with the CIS but you’ll pay a higher rate of deductions (30% rather than 20%) if you don’t. You can register as a sub-contractor here. And if you are a sub-contractor and also contract work out, you’ll need to register as both.

Managing compliance

Under the CIS, tax is deducted at source from payments made to sub-contractors, just as it would be for employed staff operating under PAYE. To get to that point, your HR/payroll team will have a large number of duties to fulfil. They’ll need to:

  • Check that your sub-contractors are genuine sub-contractors, not de facto employees
  • Check that the sub-contractor is CIS registered
  • Calculate tax and NI deductions
  • Make the deductions and pay that money to HMRC
  • Where individual sub-contractors opt out of CIS and choose to pay the higher rate, payroll will need to calculate that too
  • File monthly returns and keep records
  • Pay all your sub-contractors on time

How can outsourcing help me?

There’s the obvious and immediate benefit that by outsourcing your payroll you neatly sidestep having to complete a long list of duties that would otherwise need completing in house. But there’s more to outsourcing payroll than that:

  • You get real expertise in an area that’s essential to get right. Keep the payroll in-house and it becomes one of many duties that need completing. Outsource and you apply dedicated expertise to getting it right first time, so you can focus on the core business
  • You cut the cost of processing payroll
  • You lock in legal compliance, so you don’t face any nasty surprises. And if a payroll error does occur, your payroll provider carries the can, not you
  • You never miss a payment deadline
  • There’s no limit to the number of sub-contractors you can place on outsourced payroll
  • When CIS legislation changes (as it has repeatedly over the years) your payroll provider is on top of it, so you don’t need to worry about missing anything

Discover the benefits of outsourcing payroll for your construction business. Talk to us now.