Finance

CIS Payroll Company Explained

CIS payroll affects all construction work within the UK and jobs such as demolitions, site preparation, decorations, dismantling, and repairs. It is significant to know CIS covers you. If you qualify as a subcontractor, it is not legally binding to enroll in the CIS scheme but think of the benefits you will enjoy as soon as you join the bandwagon.

What type of business does the CIS Payroll scheme cover?

The scheme covers various types of firms operating in the construction industry include;

  1. Self-employed
  2. firms
  3. Partnerships

What is the difference between a contractor and a subcontractor?

A business or concern that pays a subcontractor for construction work identifies as a contractor. On the other hand, a firm that carries out the construction work for a contractor is called a subcontractor. You have to abide by the rules set in the CIS scheme as per your category.

What is the main reason for the CIS scheme?

Contractors deduct money from a subcontractor’s payment then handed over to the HRMC (HM Revenue & Customs). The contractor registers with the CIS. A subcontractor who owns a limited company belongs to a trust or a partnership and works for a contractor.

How can I tell I need CIS Payroll Company services?

Firstly, the business needs to determine if it qualifies to join the CIS scheme. The contractor needs to verify beyond a reasonable doubt the correct category before investing in CIS. A firm may decide to use the internal team to handle the payroll in-house or outsource the payroll services.

When is it beneficial to outsource CIS payroll?

  • If the cost of closing payroll skill-gap and retraining is higher, an in-house team with PAYE knowledge can do the job. However, familiarizing themselves with the CIS may require additional training.
  • Strained resources
  • If the company does not have a dedicated team to work on payroll, outsourcing may be a solution.
  • Eligibility status: In a case where a subcontractor decides to sub-contract other workers, the company may choose to involve a CIS payroll company to handle payments

How can CIS Payroll Company help?

The CIS Payroll Company helps a business comply with legislation by providing the HRMC with the correct data. It provides a firm with the option of viewing CIS suffered report that shows deductions made on invoices by various clients helping a business understand the CIS deducted number on EPS (Employer Payment Summary)

Conclusion

The involvement of a contractor or a subcontractor in the construction industry makes them eligible for the CIS scheme depending on your nature of work or employment status (employed/employ). A contractor may outsource his payroll for builders to a CIS payroll company. Outsourcing payroll removes some of the administrative burdens from the business.