As with any business, there are many administrative tasks and rules & regulations that you need to be on top of, which can be a minefield, especially when you are trying to carry out your actual trade at the same time!
Two schemes that are essential in ensuring financial compliance in the UK are the Construction Industry Scheme (CIS) and Pay As You Earn (PAYE)
Within this blog, Finance with Flow take a closer look at both CIS and PAYE to explain how streamlining your finance operations will allow you to focus more on running your business, yet have peace of mind that your company is compliant.
So, what is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) was introduced by HMRC to ensure tax compliance within the construction industry. Contractors are required to deduct money from subcontractors payments and pass it directly to HMRC as a form of advance tax.
This system helps maintain robust tax payments in the construction industry.
Key points about CIS:
- Contractors Responsibilities:
Contractors must verify their subcontractors with HMRC and calculate the correct tax deductions and submit CIS returns.
- Subcontractor tax deductions
Registered subcontractors typically face a 20% deduction on their payments, while unregistered ones face a higher 30% deduction. Certain subcontractors are able to apply for gross status whereby they are paid without deduction. - Monthly Submissions
CIS returns must be filed every month, with strict penalties for late submissions or inaccuracies.
What is PAYE?
Pay As You Earn (PAYE) is what HMRC uses to collect Income Tax and National Insurance from employees and ensures that the correct amounts are deducted and paid to HMRC every time Payroll is run.
Key points about PAYE:
- Tax deductions: PAYE calculates and deducts Income Tax, NICs, and other applicable contributions (like student loans) from employees’ pay slips before they are paid.
- Real-Time Information (RTI): Employers must submit payroll information to HMRC in real-time, every time payroll is run.
- Compliance risks: Failing to manage PAYE correctly can lead to fines, penalties, and issues with employee morale if wages or deductions are mishandled.
Can managing CIS and PAYE be complicated?
Both CIS and PAYE requires a lot of attention to detail, expertise and regular communication with HMRC. This can be complex to manage in house due to:
- Complex compliance requirements
- Time-consuming
- Risk of penalties
- Strain on current in-house resource
The benefits of outsourcing your CIS and PAYE?
Outsourcing the management of your CIS and PAYE to Finance with Flow ensures that your business remains compliant, while allowing you to focus on other areas of the business. We can help take the stress away through:
- Expertise in compliance
Finance with Flow are specialists in these areas and up to speed with the forever changing regulations. We will ensure that your submissions are accurate, compliant with the latest HMRC guidelines and done in a timely manner.
- Cost Efficiency
Hiring a whole in-house team can be very expensive, often meaning that companies will typically employ a smaller team which doesn’t cover all areas of expertise. Outsourcing provides you access to a whole finance team, however you will only pay for the services that you need.
- Reduced Risk
Finance with Flow are an experienced team and experts in CIS and PAYE, therefore reducing the risk of costly mistakes, ensuring your business stays compliant.
- Technology
Finance with Flow has the technology to cover you! You can avoid the headache of having to deal with various different systems in house.
- Scalability
Whether you’re a startup or an established enterprise, outsourcing allows for seamless scalability. Finance with Flow can adapt to your business’ changing needs, without you requiring major changes to your internal team.
Why chose Finance with Flow for your CIS and PAYE management?
Finance with Flow are experts in the Construction industry along with the many and varied regulations, ensuring that you remain compliant.
Our team of experts will tailor solutions to suit your business needs, taking the away the complexity.
We ensure that you remain compliant with HMRC requirements while maximising efficiency and accuracy.
Outsourcing your CIS and PAYE to us means you can focus on running your business, knowing that you are in safe hands.
Contact us today on undercontrol@financewithflow.com or 01206 326620 and let’s chat through your needs. We can shape your success together!
Visit our website to find out more about our services and packages – https://financewithflow.com/packages/
To view all legislation and guidance relating to HMRC Construction Industry Scheme (CIS) and Pay As You Earn scheme (PAYE) you can find this on www.gov.uk