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BUSINESS KNOWLEDGE

CIS – Construction Industry Scheme

 

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

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Work covered by CIS

CIS covers most construction work to:

  • a permanent or temporary building or structure

  • civil engineering work like roads and bridges

 

For the purpose of CIS, construction work includes:

  • preparing the site, eg laying foundations and providing access works

  • demolition and dismantling

  • building work

  • alterations, repairs and decorating

  • installing systems for heating, lighting, power, water and ventilation

  • cleaning the inside of buildings after construction work

 

You must register as a contractor with the Construction Industry Scheme (CIS) if:

  • you pay subcontractors to do construction work

  • your business does not do construction work but you usually spend more than £1 million a year on construction

You may be a sole trader, in a partnership or own a limited company.

Rules you must follow

  1. You must register for CIS before you take on your first subcontractor.

  2. You must check if you should employ the person instead of subcontracting the work. You may get a penalty if they should be an employee instead.

  3. Check with HM Revenue and Customs (HMRC) that your subcontractors are registered with CIS.

  4. When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.

  5. You’ll need to file monthly returns and keep full CIS records - you may get a penalty if you do not.

  6. You must let HMRC know about any changes to your business

VAT

 

https://www.gov.uk/vat-registration

 

You must register your business for VAT with HM Revenue and Customs (HMRC) if its VAT taxable turnover is more than £85,000.

When you register, you’ll be sent a VAT registration certificate. This confirms:

  • your VAT number

  • when to submit your first VAT Return and payment

  • your ‘effective date of registration’ - this depends on the date you went over the threshold, or is the date you asked to register if it was voluntary

You can register voluntarily if your turnover is less than £90,000, unless everything you sell is exempt. You’ll have certain responsibilities if you register for VAT.

Your VAT responsibilities

From your effective date of registration you must:

 

  • charge the right amount of VAT

  • pay any VAT due to HMRC

  • submit VAT Returns

  • keep VAT records and a VAT account

Most VAT registered businesses that earn over £90,000 must also follow the rules for ‘Making Tax Digital for VAT’.

 

https://www.gov.uk/guidance/making-tax-digital-for-vat

Capital Gains Tax 

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.

It’s the gain you make that’s taxed, not the amount of money you receive.

Example: You bought a painting for £5,000 and sold it later for £25,000. This means you made a gain of £20,000 (£25,000 minus £5,000).

Some assets are tax-free. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

 

If you sold property in the UK on or after 6 April 2020

 

You must report and pay any tax due on UK residential property using a Capital Gains Tax on UK property account within 30 days of selling it.

 

You may have to pay interest and a penalty if you do not report gains on UK property within 60 days of selling it.

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

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Discover more by clicking our guide below

Types of Business Entity

 

Sole Trader

Sole Traders are the simplest form of business. Normally one person, although you can still employ other people. You must register when you start trading and you need to complete a Self Assessment Tax Return for each year.

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Partnerships

This is where two or more people are running a business together but are not a Limited Company. If your business runs as a partnership you have to do a Partnership Tax Return and each Partner also has to do a Self Assessment Tax Return.

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Limited Companies

Some Business’s decide to trade as a Limited Company, this gives the business its own Identity separate to its owners (Directors).

The Directors are then classed as employees in most cases.

If you trade as a Company, there are stricter rules regarding Accounts and the Procedures you must comply with.

You have to do an Annual Return with Companies House and Pay an Annual Fee of £13. This is rising to £34 from 1st May 2024

You have to submit accounts to Companies House within 9 months of the Companies Year End.

You also have to submit a Corporation Tax Return and Company Accounts to HMRC.

As it stands, unless you buy special software, you cannot submit the CT return and Accounts yourself as there is a special format required to upload it to the HMRC website.

 

Running A Business

It is important to know how your business is doing, to do this you need to keep records of your Sales, Purchases and Other Expenses.

You can keep these records in a hand written accounts book, on a spread sheet or using accounts software.  It is important to keep these up to date.

I can help you set up whichever method suits you best, this will mean when it comes to producing your Accounts and Tax Return your Accountancy charges will be less.

 

The biggest mistakes businesses make:

  • Not invoicing your customers regularly

  • Not paying your suppliers on time

  • Not keeping any records

  • Not having a separate business bank account

  • Not choosing a certified accountant
    Check out our handy guide on how to pick the right accountant for you.

Making Tax Digital

 

FAQ

These are some frequently asked questions about making tax digital 

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Fact Sheet

Here is some info about making tax digital 

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MTD Guide

Here is our handy guide for making tax digital 

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