The Construction Industry Scheme (CIS) is a taxation scheme for individuals and businesses, including limited companies, working within the construction industry. It governs how payments must be made to subcontractors from contractors.
The CIS covers all construction work carried out in the UK. All types of businesses that work within the construction industry are covered by the scheme such as companies, partnerships, and self-employed individuals.
When setting up your limited company workers for payments on the Quba Solutions dashboard you have two options to bear in mind; Ltd Company and Ltd Company CIS
If your company operates in the construction industry or does construction-related work, you may need to register with HMRC as a contractor or sub-contractor.. It sets out the rules for how payments to subcontractors for construction work must be handled by contractor
Ltd CIS- is for all workers that have their own Ltd Companies AND work in construction. To ensure they are taxed correctly their UTR number needs to be verified by HMRC and it will determine 0% (Gross), 20% (NET) or 30% (Unmatched). Most will be taxed at NET as they are registered as CIS with HMRC.
If the verification comes back unmatched they will be taxed at 30%, this can always be rectified but would mean the owner of the LTD CIS company must personally contact HMRC to correct. A small amount of LTD CIS companies will be under Gross status.
LTD Company - is for all workers that have their own Ltd Companies but are NOT in construction. You will still require their UTR but they will not have tax deducted.
Just something to think about when getting your workers set up and paid.