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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15933
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My company operates in the construction industry. Its

Customer Question

My company operates in the construction industry. Its subject to 20% deduction. Do I deduct 20% tax when I pay my subcontractors who are also net status ? If so, how ?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

You need to register as a contractor within the Construction Indusrty Scheme (CIS). You can find out how to do that starting here and following the relevant links. The other sections tell you how to make deductions and account for them to to HMRC. HMRC will set you up with a CIS payment scheme or convert your existing PAYE scheme to a PAYE/CIS scheme if you have one. Sectrion 5 here deals with how to make deductions from your sub-contractors pay.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
You did NOT answered my question. My company and subies are registered under CIS. My company and subies are net status, ie 20% deduction. My question is because I received net payments ( 20% tax deducted ) , do I deduct 20% tax when I pay my subies ?
Expert:  TonyTax replied 1 year ago.

Take a look at section 5 here. The link was in my previous post.

You deduct 20% tax from your subbies if they are CIS registered and 30% tax if they are not CIS registered.

Customer: replied 1 year ago.
Tony,If you cannot answer my question, I want my £40 back.
Expert:  TonyTax replied 1 year ago.

Everything you need to know to comply with the CIS rules is in here. Have you clicked on the blue links I gave you previously? Here is the full link on deductions from subbies:

https://www.gov.uk/what-you-must-do-as-a-cis-contractor/make-deductions-and-pay-subcontractors

As your subbies are CIS registered you deduct 20% tax from them. I cannot be clearer than that.

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