Construction Industry Scheme Guide
A Guide to the Construction Industry Scheme
Payroll in the construction industry can be confusing, especially with all the jargon used. That is why we have put together this simple guide to the construction industry scheme, to make it much simpler and less confusing!
Why does the construction industry have a different payroll model from other industries?
There are many different aspects to consider when looking at the best payroll model to use for the construction industry, it differs from other industries as there are often variable hours, overtime, employees, contractors and subcontractors to organise as well as HMRC to keep happy. That is why the construction industry scheme was introduced, it is a specialist payroll model used by construction businesses to simplify the murky world of payroll compliance.
What is the construction industry scheme?
In 1999, HM Revenue and Customs (HMRC) put in place a tax plan called the Construction Industry Scheme. The plan was made to help stop people in the construction business from not paying their taxes. CIS says that contractors and subcontractors need to sign up with HMRC and pay their workers in a certain way.
A contractor is someone who hires a subcontractor to do building work and gets paid for it. Anyone who does building work for a contractor is called a subcontractor. The plan works for both people and businesses.
Why is it beneficial to use the construction industry scheme?
Your construction business may enjoy a lot of benefits from outsourcing your payroll. To begin, it can save you time and money by giving your employees more time to work on other things. This is especially important if you work in construction and have a lot of jobs going at once that need your attention. If you outsource your payroll, you can let professionals handle it. They have the knowledge and experience to make sure it’s done correctly and in line with the rules.
Second, outsourcing can help you avoid mistakes and fines that cost a lot of money that have to do with salary taxes and following the rules. This is very important in the construction business, where there are often a lot of rules and regulations to follow.
Third, outsourcing can give you access to the newest payroll tools and technology, which can help you make your payroll processes run more smoothly. In the long run, this can save you time and money and give you more time to grow your business.
Many individual subcontractors want the option to remain self-employed – using CIS enables them to do that. Businesses can suffer if you’re not providing this as an option to the workforce.
How is the construction industry scheme payroll calculated?
Payroll calculations can be hard, especially when you think about all of the above factors. To figure out your construction company’s payroll, you’ll need to keep correct records of how many hours each worker put in, including overtime hours and any deductions. You’ll also have to figure out income taxes, which can take a while. To make sure their payroll is done correctly and quickly, many construction companies hire a professional payroll outsourcing business to do it for them.
To find out how the construction industry scheme can support your business, contact our team.
There are many reasons why outsourcing payroll is a great option for your business. Benefits of outsourcing payroll include improved compliance and increased efficiency. To find out more about why you should outsource your payroll, read our blog.
Professional Passport demonstrates a company is fully compliant and helps build credibility and trust with those you are working with. A labour provider must go through an evaluation by the Professional Passport team in order to be accredited. The evaluation takes into account a number of factors, such as work rights, tax and national insurance compliance, and health and safety. The labour supplier is required to offer proof that they adhere to the necessary requirements in each of these categories.
There are lots of things to consider before signing up to a payroll agency and with so many to choose from it can be difficult to know where to start. Some key aspects to consider are reputation, accreditations and customer service agreements. For further information on what to consider when selecting a payroll agency, read our blog.
There are multiple documents that are accepted as proof of your right to work in the UK, for the full list of accepted documents please visit Citizens Advice.
Here are some of the forms of ID that are accepted:
Valid forms of ID:
- Birth Certificate
- Passport
- Driving Licence/Provisional
If not a British Citizen:
- Passport
- Driving Licence/Provisional
- Biometric Residence Permit/Card (front and back)
- ID Card (front and back)
A share code is a 9-digit code made up of letters and numbers that proves a worker’s right to work in the UK.
You can apply for a share code online. The share code is valid for 90 days.
A share code obtained for a different purpose, such as to demonstrate your right to rent, cannot be used to demonstrate your right to work. You will need one of the following to get a share code:
- your biometric residence permit number
- your biometric residence card number
- your passport or national identity card
Once you have your share code you can share it with your employer who can check your right to work using the code and your date of birth on the government website.
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