Once you’ve registered for CIS, it’s your responsibility as the contractor to calculate and deduct the right amount of tax due from the total earnings of your subbies. You need to then make one payment to HMRC and the other to your subbies.
The amount of tax you need to deduct depends on the status of each subbie. You can confirm their status by verifying them with HMRC who will tell you if they should be deducted tax at 20%, 30% or 0% for those with a gross payment status. You also need to understand which parts of the subbie’s payment should be subtracted prior to working out the tax deduction.
Find out more information on the verification process here.
Every month you must pay HMRC any deductions you have made. You must also complete a monthly return, called CIS300, which details all payments you have made under CIS. This is done through your Government Gateway. There are deadlines and penalties for failing to send the information through, or if the information is wrong. The penalties start at £100 and go up to £3,000 or 100% of the CIS deductions – whichever is higher.
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