• Chris Muckell

Updated: Mar 20, 2019



When you’re working in the construction industry, there are some things that are worth knowing more than others, like these...


Example A) You probably don’t need to know how to spell pterodactyl, but you’ll probably want to know the difference between an engineering brick and a wheelbarrow.


Example B) You probably don’t need to know Tony Hawk was the first person to land a 900 but, for the sake of getting embarrassed in front a Homebase store assistant, you might want to know that tartan paint isn’t a real thing.


Example C) You probably don’t need to know which entrepreneurs became successful after 40, but you will definitely need to know all about the Construction Industry Scheme (or the CIS, for those who don’t want to type Construction Industry Scheme every single time).


Thankfully, that’s what we’re here for. So, to help you out, engineering bricks don’t have a wheel at the front (or any wheels at all), the tartan paint thing is a first day trick every labourer has fallen for and, last but by no means least, the CIS is basically something Her Majesty’s Revenue and Customs intro’d a few years back to try and clamp down on tax evasion, which construction companies were doing by deducting tax from subcontractors at source whether they meant to or not.


And that’s just the start.


So, without further ado, here’s everything you need to know about the Construction Industry Scheme and how it works.



The Overview Thing

If you’ve been an adult for more than 9 and a 1/2 minutes, you’ll know life is complicated. And the construction industry is no different. If anything, it’s even more riddled with complexities. It’s like hanging out with complexities on steroids - such as the CIS thing.


It’s one of the most complex areas of the construction business to negotiate. Period. Essentially, if you’re a contractor, you need to determine the status of the lads (and girls) you pay to carry out any work for you, which we all know can be more challenging than your first Rubiks Cube. Are they are a subcontractor? Or should they really be thought of as an employee? And why is this so important?


Well, it’s important because the CIS doesn’t apply to everyone, like the *staff employed by your company (*employee tax is deducted under ye olde PAYE scheme).


The CIS & Contractors Thing

There’s a pretty big area of greyness that has led to a lot of misunderstanding about whose considered a contractor in the eyes of the CIS, so here’s what you need to know: if you give money to subcontractors to complete any construction work on your behalf, or you spend an average of more than £1 million a year on construction over any given period of three years, the CIS is gonna look at you and say, “Hey, Mister Contractor Man, how are your tax payments going?


Don’t panic, though. This shouldn’t cause much in the way of a headache. It just means you need to “verify” any subcontractors you pay and make sure they’ve registered with HMRC — something that can be done on the internet. If they have registered with CIS, simply give them a pat on the back and then deduct tax at a rate of 20%. If they haven’t registered with HMRC, hold back on said back-pat and deduct tax at 30% instead. See. We told you it was simple.


The Keeping Track Thing

Okay, we’re gonna get real for a moment: trying to keep track of your payments and tax deductions and whatnot is a real migraine-maker (which is why we recommend you give us a call and let us take all that stress away like a tasty after-work pint). And the reason it’s a real pain in the youknowwhere is because you need to keep records of everything (and then remember where you’ve kept those records).


These things you need to keep track of are...

1. The gross amount you’ve paid each of your subcontractors

2. The amount of tax you’ve deducted

3. The cost of the materials

4. And the verification numbers of your subcontractors

5. (Oh, and you’ll also want to give your subcontractor a written statement saying you’ve deducted tax under the CIS)



The Three Tests Thing

You know how we said this CIS thing was a bit complex? Well, we meant it. And here’s one of the most perfect examples ever: every so often, you will use a subcontractor that has successfully applied for ‘gross payment’ status. This means you won’t need to deduct any tax from their pay because they’re going to deal with their own tax payments come the end of the tax year. Easy, right? Wrong. For these guys (and girls) to receive no-tax-deducted-payments, they need to pass three tests. Are you ready?


1. The Business Test: The construction work is based in the UK, and the business was run using a bank account.

2. The Turnover Test: The individual subcontractor’s annual turnover is at least £30K, and that’s only if they’re a sole trader. If they’re part of a partnership, or they are a company, there will be a higher minimum requirement.

3. The Compliance Test: To pass the final “gross payment” test, the subcontractor needs to have been organised, by which we mean they need to have no outstanding tax returns and they don’t owe HMRC any money.


And this isn’t just a one-off thing. For a subcontractor to receive gross payments for their work, they need to pass these three tests each and every year.


The Subcontractor Requirements Thing

Okay, so there is nothing to say you have to be part of the CIS as a subcontractor. Nothing. Nada. Zilch. It’s just not a mandatory thing. However, if you do register - BOOM - there’s a nice chunk of tax savings to be enjoyed. The only compromise if you do register is: you must keep proper records of everything so that you can fill in an uber-accurate tax return, including things like the direct cost of your materials (once again, that’s something the Accounts Done team can do for you, just bell us).


And then there are the other hoops to jump through, like providing your contractor with correct information so that your status can be verified. If you don’t, you could wake up to a letter asking for a £3,000 fine for lying about it, and then receive a dollop of other penalties for not providing the appropriate records when required to (seriously, call us!)


The Potential CIS Issues Thing

We touched on the big grey area of working out who’s an employee and who’s self-employed at the beginning of this article-thingy, but we’re going to mention it again because it’s proper important when applying for the CIS. Get it wrong, make your payments late, or do anything like that and you could be slapped with a £100 fine, and that would just be annoying.


Thankfully, we have experience in exactly this area. It’s one of our world-famous expertise (excuse the exaggeration). So, if you’re in the construction industry but aren’t 100% sure whether to register for the scheme - or you just want a friendly chinwag to learn a little more about what you need to be doing - ping us an email and we’ll clear that muddled mind of yours. Sure, it probably won’t be the most exciting email you’ve ever sent or received, but it might be the most helpful, law-abiding and money-saving email, and that’s got to be worth some sort of kudos point, right?



Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.



We're going to say something that you're (probably) thinking -- "God, there are days where drinking on the job sounds appetising." Not all the time. Just some of the time. When the stress-o-metre is about to explode like an over-inflated balloon. Those kind of days. The problem is, drinking on the job is frowned upon if you're not a) Don Draper, b) Charles Bukowski or c) a 40-year-old entrepreneur that works from home. We mean, you could crack open a bottle and enjoy a tipple at work, but you'll probably find yourself updating your CV pretty soon afterward (and that's the sort of tedious task no one wants to do). Sigh. The reality is, all of us responsible adults have to wait until we've clocked off and left the office vicinity before we can enjoy a craft beer... or two... followed by half a bottle of Jack Daniels.


But you're not a responsible adult, are you? And we know that because, well, you're reading this blog post. That means a little part of you wants a job where you can drink during office hours. Cue some great news. We've found those kind of jobs. And they don't just let you sip on the good stuff, some actively promote it. Can we get a "HELL YEAH!"



Brew-Heroes

We're not sure what their official title is (brewer? Master of the brew? Brew-maker? Brewing badass?), all we know is: they brew beer. And to do that well you've got to taste what you're brewing, right? Okay, so you can't get soooo drunk that you think adding tabasco to the recipe would be a good idea, but you can be the guy who created a beer that became soooo cool bearded-hipsters in Shoreditch began drinking it (probably out of copper mugs or something).


Sommelier

If you're not sure what a suh-mel-yay does, they get paid to describe how a wine tastes. Professionally. And, unless you're born with the gift of good luck, you've kinda got to drink said wine to be any good at this job. Actually, you've got to drink loads and loads of wine to be good at this job. Admittedly, most suh-mel-yays have a spit bucket by their feet, but we've done some research and we're pretty sure that's an optional extra.


Food Critic

As if being a food critic wasn't awesome enough already, you're definitely getting to pair your vegan steak with an expensive bottle of vino (NB: we know vegan steaks aren't a real thing... yet). It would just be wrong to chow down on a delicious plate of grub made by a culinary genius and only have a glass of lemon water to enjoy it with. Not that the restaurant owner would allow that. They want a good review and, apart from flying and driving, there's no scenario where booze doesn't make something better.


Author

We should probably confirm not all authors drink. But all the best ones definitely do. Ian Fleming definitely did (#VesperMartini). Hunter S. Thompson never stopped drinking. Truman Capote basically had vodka and orange on tap. Oscar Wilde had a serious thing for Champagne. And Charles Bukowski, well, what do we say -- he was a big fan of all kinds of hooch. Whether that's the common denominator thank links their genius, we can't say. But to disagree would mean it's a coincidence and, come on, that's unlikely.


Bartender

We interviewed a bartender recently (okay, we went to a bar and chatted to a barman while waiting for the rest of our party to show up) and it turns out there are a lot of bars that don't allow their staff to drink the stock, which makes a lot of sense. But there are some bars where you can. Usually that only happens if you own the bar, know the owner really well, know the CCTV blind spots, or work in a really-forward thinking bar. But that's fine. It just means you need to find one of these bars. Schimples.


PR Person

In order to be a good PR person (*that's definitely not their official title), you need to be awesome with people. It's as simple as that. You need to be polite and charming and enthusiastic and buzzing. And then there's the whole social side of things with the events and parties and schmoozing. Ergo, you will be having a few drinks about five times a week.


Travel Writer

Being a travel-writer means travelling the world, stopping off in different far-flung hotspots, and then writing down your experiences so that your readers know just how to make their vacation the best one ever. Of course, going on vacay means getting loose so, yeah, there's a lot of "researching" beach bars, signature cocktails, local nightclubs, and which restaurants have the best wine list to accompany their food menu. It's like the best kind of drinking on the job.


Rockstar

There's no scenario where a rockstar isn't allowed to drink. They can do it on stage. In their music videos. After a gig. Before a gig. While being interviewed. During businessy meetings. In the back of their chauffeur-driven cars. It's non-stop. And if anyone did have the audacity to say, "ahem, could you possibly not do that..." They would find themselves on the receiving end of a mega-meltdown, then get fired by their boss, and then watch on as the rockstar walks away... totally unscathed... and still drinking absinthe.



Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.



Humans are not elephants. Now you’re probably thinking, “Well, duh!” But there’s a reason we’re highlighting the obvious and the reason is simple: elephants never forget, which is a slightly weird and long-winded way of saying, “HUMANS DO FORGET!”


We’re not saying humans forget everything. Like you probably remember your eldest child’s name, and how to get to work, and what your favourite sandwich is. But there are some things you’ve probably forgotten, like when your wedding anniversary is, whether you put the bins out, and what new rules affecting our normal lives were introduced last year. So, to jog your memory: you got hitched on May 21st, you didn’t put the bins out, and the new rules included things like passport renewals changing, new car tax rules being brought in, Universal Credit getting a few tweaks, and Employment Allowance bits being changed. Basically, 2018 was busy.


And 2019 is gonna be no different.


In fact, here are six or seven new rules-slash-laws being brought into effect in 2019 that will affect workers and businesses in some way, meaning they’re probably quite handy to know about.


So, let’s get down and boogie with them, shall we?



1. National Living Wage Is On The Up


Ladies and gentlemen, entrepreneurs and employers, one of the reasons you need plop 1st April 2019 into your cat calendar in thick red pen is because the National Living Wage and National Minimum Wage rates are set to increase on that day.


  • For employees aged 25 and over, the new minimum wage is going from £7.83 per hour to £8.21 per hour.

  • For those humans aged 21-24, it’s going from £7.38 to £7.70 an hour.

  • As for those aged between 18 to 20, this figure is jumping from £5.90 an hour to £6.15.

  • And for those whippersnappers of school age (but under 18), their money is set to go up from £4.20 an hour to £4.35.

It’s probably also worth knowing about the changes coming to the world of apprentices too, who will see their minimum rate go from £3.70 to £3.90 an hour -- that’s as long as they are a) under 19 or b) over 19 but in the first year of their current apprenticeship. There. It’s a lot to remember, but that’s what we’re here for.


2. Pension Contributions Are Rising


Pensions are like the James Brown of the working world in that they’re proper groovy. It’s about looking after our employees so that they can look forward to relaxing in the Costa Del Sol on the day they turn 65 -- and then never leaving. Of course, right now, the existing rules mean employers must contribute a minimum of 2% of a worker’s pre-tax salary, with the worker contributing 3%. But the minimum contributions for auto-enrolment pension schemes are going to increase for employers and employees as of April 1st 2019 (yup, it’s a busy day). Anyway, the new rules mean that employers will now have to contribute a minimum of 3%, and employees will have to put aside 5%. Simple.


3. What Do We Want? Payslips!


In case April 2019 wasn’t already chock-full of change, there is another rule being brought into play on the 6th, and it’s all about granting non-employees (you know, contractors and freelancers and stuff) the legal right to a payslip. And that’s not all. Employers will also be obliged to pop the total number of hours worked on the payslips of any employees whose wages vary depending on how much time they’ve put in.



4. Pay Gaps Are Getting Exposed


The pay gap thing has become big news over the past year or so (which we think is some right good, Tim Henman-style fist-pumping news). There shouldn’t be a gap in pay because someone’s a dude and someone’s not a dude. As such, on April 4th 2019, new legislation will come into play that requires any private organisation with 250+ employees to (again) publish their gender pay gap figures. Go society.


5. NDAs Have Been Naughty


Once upon a time, NDAs (also known as Non-Disclosure Agreements) were used for protecting things that needed protecting, like intellectual property and stuff. But then people starting getting a bit naughty and using NDAs to silence claims of bullying and harassment and bad things like that. Well, this year, there’s gonna be a review into all this and, hopefully, it will make NDAs great again #theyarenotgaggingclauses.


6. VAT Is Getting Revamped


Holy-moly, April is a solid month for new rules - and this time it’s all to do with VAT. To give it to you in a nutshell, all VAT-registered businesses that have a taxable turnover above the VAT registration threshold will have to start keeping VAT records in digital form, and then file their VAT returns using digital software. Don’t worry, though -- we can handle all of that nitty-gritty stuff for you without breaking a sweat. It’s what we do (alongside a load of other great stuff).


Basically, this year, you might want to try and be a little more elephant or, failing that, get a bookkeeper that will blow your socks off with their organisational skills and industry knowhow [cough-Accounts-Done-cough].



Thanks for reading! For more bookkeeping-slash-accountancy-slash-finance advice, and a few weird-thoughts, please do follow us on Facebook and LinkedIn and then tell all your businessy friends to do the same.

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