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CIS Construction Industry Scheme

Adding a pre-verified CIS subcontractor4:17
Adding a pre-verified CIS subcontractor
Adding an un-verified CIS subcontractor3:31
Adding an un-verified CIS subcontractor
Reverifying a CIS subcontractor2:19
Reverifying a CIS subcontractor
Filing the CIS monthly1:50
Filing the CIS monthly
4 videos, with playing time of 11 minutes


 

Adding a pre-verified CIS subcontractor4:17

"I'm adding a CIS subcontractor who already has an 11-13 digit verification reference from HMRC, from our previous payroll system. How do I add this pre-verified CIS subcontractor?" 

To add a pre-verified CIS subcontractor: 

  1. First choose the person by going to:   Menu > People 
  2. Once you've chosen the subcontractor, click: Person > Pay > Pay settings > Does own taxes (as a contractor) 
  3. Turn them on as a contractor, and click: Save 

Next, to set the CIS settings: 

  1. Click through to: Person > Pay > Tax > CIS subcontractor type 
  2. Choose the subcontractor type that applies, sole trader is the most common. In this example we're showing steps for subcontractors your company has previously verified with HMRC. You can find their 11-13 digit verification reference number on past CIS monthlies. 
  3. So next, click your way to: Previously verified, and select: Yes 
  4. Next, enter their: CIS verification reference number 
  5. After that, click: CIS deduction percent, and choose the rate that HMRC gave you, 20% is the most common. 
  6. Finally, click over to: UTR (Unique Taxpayer Reference), and enter the subcontractor's UTR. 

That's it. That's all you need to enter. 

Within seconds, you'll see a purple tick showing that your new CIS subcontractor has been successfully added. 

If you have a number of subcontractors, you can see CIS subcontractor status on the employee's report if you click over to: Pay batch > Pay > People Here you can see that Clara is set to 20%. 

 

If the subcontractor you're adding has never been verified by you before, watch our video about Adding an un-verified CIS subcontractor 

"How do I get my CIS Payment deduction statement?" 

As a CIS subcontractor, you're automatically emailed a Payment and deduction statement every time you're paid, attached as a PDF. In other words, if you're paid weekly, you'll get a PDF emailed weekly. 

Once the email arrives, scroll down to open the PDF attachment. In the PDF you'll see the CIS deduction for the current payday. 

  • Keep a copy of the PDF. 
  • You'll need a year's worth of these PDFs to complete your tax-return, at the end of the tax year. 

In addition, 1st Money also stores a copy of your Payment and deduction statements. To view them, click: Person > Pay > Tax forms history 

By default, the last couple of years of tax forms are shown. Click on each row to view each statement. 

To download a copy: 

  1. Turn off "Add cover". 
  2. Then click: Download PDF 
  3. You can download as many as you like. 

To go back further into the past: 

  1. Click: Show settings > Dates 
  2. Then choose one of the options. 

And that's it! That's how you get your CIS Payment deduction statements. 

"How do I change my subcontractor's deduction percentage?" 

When you need to change a subcontractor's CIS deduction percent: 

  1. Click:   Menu > People, and open the CIS subcontractor. 
  2. Next, click: Pay > Tax > CIS deduction percent 
  3. Change the percentage and click: Save 

And that's it! That's all it takes to change a subcontractor's CIS deduction percent. 

Updated: Wed, Feb 9, 2022. Keywords: CIS, HMRC, building, construction, industry. Headings: `How do I add a pre-verified CIS subcontractor?`
 

Adding an un-verified CIS subcontractor3:31

"How do I add a new CIS subcontractor?" 

When you hire a new CIS subcontractor your first step is to add them as a person in 1st Money. To get started: 

  1. Go to:   Menu > People 
  2. Then, click: Invite a person 
  3. Once it's open, enter the subcontractor's email and click: Invite 
  4. Next, fill in the person's name. 
  5. Choose: Paid as a contractor 
  6. Then set the "Pay batch" to the same pay batch used by other CIS subcontractors, and click: Next 
  7. Set any of the "Job settings" if you wish, and click Next 
You can always change these later. 
  1. Now, when you see "Is a CIS subcontractor?", choose: "Yes" 
  2. You're welcome to set a "Rate amount", but for CIS subcontractors this is optional. 
  3. Then click: Next 
  4. Choose the subcontractor type. In this example we'll choose: "Company" 
  5. Next, set "Previously verified" to "No", and then fill in the other details. 
  6. Finally, click Set Address and enter their address. 
  7. Click Next and continue through the other steps of the onboarding. 
  8. When done, click Finish, then: Close 

The admin onboarding summary now shows any remaining steps left to complete. To get to the admin onboarding summary, simply scroll down and look for: "Admin onboarded" 

Here you'll see that only the "CIS verification reference number" step is left: 

  1. Click the edit button to open the CIS verification. 
  2. Then click: Verify CIS 
  3. The CIS subcontractor's information is now being sent to HMRC to be compared with registered subcontractors. It usually takes HMRC around 15-20 seconds to process the verification and send back confirmation that they received it. 
  4. Once finished, you'll see this purple tick showing the verification's completed. 

And that's it! That's how you add a new CIS subcontractor. 

Sometimes you may see a red popup saying "CIS subcontractor not registered". This means: 

  • That the CIS subcontractor wasn't found in HMRC's database, so they can't get the 20% deduction rate. 
  • Once they've registered, wait for HMRC to tell you to set them to the lower 20% rate. 
  • Until then you can still pay them, but they'll have deductions at the highest rate of 30%. 
  • They can register for CIS on the Government Gateway website, or by calling the CIS helpline. 

And that's it! That's how to add a CIS subcontractor that isn't registered! 

Updated: Wed, Feb 9, 2022. Keywords: CIS, HMRC, building, construction, industry. Headings: `How do I add an un-verified CIS subcontractor?`
 

Reverifying a CIS subcontractor2:19

"How do I reverify a CIS subcontractor?" 

If a subcontractor hasn't been paid or verified in the current or previous two years they must be verified again. When you're paying a CIS subcontractor, you may see a warning, like this, that their verification has expired. 

To reverify them in the CIS subcontractor settings you can either: 

  • Click the warning icon. 
  • Or, alternatively you can click: Person > Pay > Tax > CIS verification reference number 

If there's no changes to make, then beside the CIS verification reference number click Reverify unchanged to verify their existing details to HMRC again. 

It usually takes HMRC around 15-20 seconds to process the verification and send back confirmation that they received it. Once HMRC responds, you'll normally see a purple tick showing that the verification has been completed. 

"How do I change the details of a CIS subcontractor?" 

If any of the subcontractor's details have changed you'll need to: 

  1. Click the "delete" link. 
  2. Once deleted, all their previous verification details will disappear and you can now choose the CIS subcontractor type again. 

The most common reason to delete a verification is changing from a sole-trader to a company, so in this example we'll change to a company. 

  1. Set "Previously verified" to: "No" 
  2. Enter the company name and registration number. 
  3. Then click Save to re-verify with HMRC. 

Again, it could take HMRC 15-20 seconds to do the verification, so you may have to be patient while you wait for HMRC's response. Once finished, again you'll see the purple tick showing that the verification has been completed. 

And that's it! That's how you reverify or change a CIS subcontractor. 

Updated: Sat, Feb 5, 2022. Keywords: CIS, HMRC, building, construction, industry. Headings: `How do I reverify a CIS subcontractor?`
 

Many CIS subcontractors give a weekly or monthly invoice to request payment for labor, payment for materials, and payment for other expenses.

To pay them through 1st Money Payroll, open their paystub, and then create a new payable for each item on their invoice.

Only a person with payroll admin permissions can do these steps.

Depending what's on their invoice, decide from the three headings below.

 

Labor is the most common amount invoiced. It's not unusual for an invoice to have only labor and no other expenses.

To enter a payment for labor:

  1. Go to: Paystub > Payables
  2. Click: New payable
  3. Select "CIS labour" (see image )
  4. Enter the amount from the invoice.
    • If the CIS subcontractor is VAT registered: only enter the amount before VAT is added (remove the VAT if you have to).
    • If the CIS subcontractor isn't VAT registered: VAT shouldn't appear, so use the amount from the invoice.
  5. Enter a description (optional).
 

Only materials purchased to fulfil a particular construction contract can be included in the invoice. These may include:

  • Materials the subcontractor's paid for directly.
  • Manufacturing or prefabricating materials.
  • Equipment which is now unusable ("consumable stores").
  • Plant hired for the job.
  • Consumable items such as fuel needed for plant and equipment (including if plant wasn't hired).

To enter a payment for materials:

  1. Go to: Paystub > Payables
  2. Click: New payable
  3. Select "Qualifying CIS cost of materials" (see image )
  4. Enter the amount from the invoice.
    • If the CIS subcontractor is VAT registered: only enter the amount before VAT is added (remove the VAT if you have to).
    • If the CIS subcontractor isn't VAT registered: include VAT (if any) in the amount.
  5. Enter a description (optional).
 

Other expenses are mostly subsistence and travel.

Any subsistence and traveling expenses (including fuel costs) must be recorded separately from "Qualifying CIS cost of materials" (above).

To enter a payment for other expenses:

  1. Go to: Paystub > Payables
  2. Click: New payable
  3. Select "Other expense" (see image )
  4. Enter the amount from the invoice.
    • If the CIS subcontractor is VAT registered: only enter the amount before VAT is added (remove the VAT if you have to).
    • If the CIS subcontractor isn't VAT registered: include VAT (if any) in the amount.
  5. Enter a description (optional).
 

Paying paystubs1:14 Once you've entered the invoice amounts (above), go ahead and pay the paystub just like normal (see the video).


 

Getting the CIS Payment deduction statement1:28 As soon as their paystub is paid, a PDS (Payment and deduction statement) is generated as a PDF and emailed to the CIS subcontractor.

The CIS monthly then contain the payments and deductions for that month.

Updated: Sat, Aug 27, 2022. Keywords: CIS. Headings: `How do I pay a VAT registered CIS subcontractor?`
 

Filing the CIS monthly1:50

"How do I file the CIS monthly?" 

The CIS monthly has to reach HMRC by the 19th of every month. To file the CIS monthly: 

  1. First click your way to: Pay batch > To-do 
  2. Then, click through to: CIS monthly 
  3. Check the details are correct. 
  4. And click: File with HMRC 
  5. And then, click: Yes ... mark as done 

It usually takes HMRC around 15-20 seconds to finish processing the return and send back the result. 

Once finished, you'll see two checkmarks on your To-do list to show it's been sent, and that HMRC confirmed receipt. If you want to see more details, click either of these checkmarks. 

"How do I re-file the CIS monthly?" 

If you need to make amendments: 

  1. Hover your mouse over the row and click: "Redo" 
  2. The report will load with the up-to-date information. 
  3. You could also check the box for nil returns if needed. 
  4. Then click: File with HMRC 

When you re-file the CIS monthly with changes, HMRC will only store your last filing. 

And that's it! That's all you need to do to re-file the CIS monthly! 

Updated: Fri, Feb 25, 2022. Keywords: CIS, HMRC, building, construction, industry. Headings: `How do I submit a CIS return?`

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