FAQs

The CIS was introduced by HM Revenue & Customs specifically for self-employed workers operating within the construction sector. The CIS rules mean that the contractor (Centurion Payroll Services) is usually obliged to withhold tax on its payments to you, at either 20% if you are ‘registered’ or 30% if you are not. In some cases, where you have an exemplary tax record or your turnover is higher than average, you may be granted “gross status” which means no tax is deducted. It is often a good idea to consult with an outsourced payroll company when making CIS payments and paying contractors through payroll to ensure that you are being paid correctly with HMRC compliant CIS payroll.

It is important to be clear that even though a contractor is withholding tax on payments made to you and you might receive documents very similar to pay advice, you are not being treated as an employee and so will not be entitled to any of the employment rights associated with employment (for example holiday pay, statutory sick pay, pension enrolment etc).

Legislation introduced back in 2014, means that recruitment agencies are responsible for determining an individual’s employment status.

An SDC questionnaire focuses on ‘how’ the work is carried out by a worker and governs whether a worker is subject to (or to a right of) SDC or not. Should a worker be subject to SDC, then they must be placed on the payroll and are deemed as ‘employed’. They can only be paid as self-employed subcontractors if they are deemed to be operating without any supervision, direction, or control – or in other words if they genuinely act as a freelance worker who is not micromanaged and told how to undertake their work. 

Read more about SDC.

To be paid via your UTR number, you must be genuinely self-employed, by registering your details with us you agree that: 

You are registered with the CIS Scheme as a self-employed subcontractor and confirm that you work without the supervision, direction or control of your agency or their end client. The work you carry out is not directly overseen by anyone on site to ensure it is being carried out correctly and to required standards. You are not told how to perform the required tasks, although you may be given plans outlining the scope of the work required. You decide the best way of completing the job and no-one has the right to move you from task to task as priorities on site change. Apart from Health & Safety requirements, you can decide when and where work is carried out. You are free to come and go from the site as you please and you do not need to report to anyone accounting for your exact whereabouts. You would then benefit from self employed payroll services.

You can check how HMRC regard your employment status by visiting https://www.gov.uk/guidance/check-employment-status-for-tax 

You can register in several ways: 

• Online on https://www.gov.uk/set-up-sole-trader    
• Calling the HMRC Helpline to get a UTR number on 0300 200 3310. 

A UTR number is normally issued by HMRC within around 10 working days of applying. 

If you are self-employed, by law you are required to register with HMRC so they can issue you with a notice to complete a Self-Assessment tax return and send you tax statements when required.  

When you register with Centurion for construction industry payroll, we are required to verify your UTR number with HMRC. To do this we will need your Unique Taxpayer Reference (UTR) and National Insurance number. The verification process will then confirm whether you are treated as a standard deduction (20% for fully registered subcontractors) or higher rate deductions (30% for subcontractors not registered with the scheme) or gross status (no deduction of tax made). 

Any amount that we deduct will be paid to HMRC as advance payments towards your individual income tax and National Insurance contributions (NIC) bill for the relevant tax year. At the end of each month, you will get a statement confirming the amount of tax we have deducted under CIS and paid to HMRC on your behalf.

Yes – Every time we process a payment, you will receive a pay advice by email. The pay advice is password-protected as it contains confidential information. The password will be set by default to your National Insurance number in capital letters and no spaces. The pay advice will show your gross earnings and all deductions of tax and fees made. In addition to this, at the end of each month, you will also receive a statement of deductions for the preceding month. This will include Centurion’s name and tax reference number; details of the payment(s) made; the cost of any materials incurred, and the deduction(s) made from the payment(s). It is vital that you retain these statements (as well as details of your expenses – see below) as you will need them to do your tax return. We can always provide copies or summaries if required. 

When calculating the actual amount you pay tax and National Insurance contributions (NIC) on for your tax return, you can take into account any expenses ‘wholly and exclusively’ paid out for the purposes of your business, such as van expenses, tools and materials and administrative costs, including mobile phones. You may be asked to provide evidence by HMRC that firstly, you actually incurred an expense and secondly, the expense was wholly and exclusively for your business. You should only include business expenses – if HMRC were to challenge the expenses included on your tax return and they were not accurate then you could be subject to penalties. 

In most cases it will be clear if something has been incurred wholly and exclusively for the purposes of your business, such as tools or materials. If you use something for both business and private purposes, a mobile phone or vehicle for example, you should keep evidence – mobile phone bills/mileage logs, etc. so that the appropriate proportion of business use can be identified. You may be able to claim a round sum amount equal to the annual trading allowance for your business expenses instead of the actual business expenses you have incurred. This is currently set at £1,000 per annum.  

Completing and submitting a Self-Assessment tax return can be complex and daunting. You can do it yourself using the Government Gateway System or you may wish to appoint an accountant or professional tax advisor to assist you. 

Our construction industry payroll company works very closely with a boutique tax practice called Crystal Tax https://www.crystal-tax.com/ who work on a no win, no fee basis for many of its services. They specialise in CIS self-assessment returns, limited company accounts, VAT registration and are extremely efficient and will save you time and money by dealing with a lot of the administration and paperwork on your behalf. 

If you are VAT registered, then CIS deductions are not withheld on the VAT element of your invoice. If you are thinking about becoming VAT registered voluntarily but have not yet done so, then we recommend you speak to Crystal Tax https://www.crystal-tax.com/ 

If you are self-employed, you are responsible for settling your own tax and National Insurance contributions.  

You will need to:

• Register with HMRC for self-employed National Insurance and Self-Assessment.
• Understand what taxes you must pay and when 
• File a Self-Assessment tax return. 

The tax year runs from 6 April to 5 April, so the 2021/22 tax year will be from 6 April 2021 to 5 April 2022 and the 2022/23 tax year will be from 6 April 2022 to 5 April 2023. If you choose an accounting date of 5 April, then your accounts will follow the tax year. So, if you started your business on 1 September 2021, when you prepare your accounts for the 2021/22 tax year you will use the period 1 September 2021 to 5 April 2022. In subsequent years, your accounts will follow a complete tax year, so for the 2022/23 tax year the accounts will be from 6 April 2022 to 5 April 2023. It is more complicated if you use a different accounting end date (but remember any date chosen from 31 March to 5 April inclusive will be treated as 5 April for the purposes of your Self-Assessment tax return).