Alright, let’s have a natter about something crucial for contractors in the construction industry: CIS gross status. It’s not the sexiest topic, but stick with us – this could save you a lot of hassle and a fair bit of money.
What’s CIS gross status?
First off, CIS stands for Construction Industry Scheme. It’s a set of rules that HMRC uses to regulate tax payments from subcontractors to contractors. If you’re a subcontractor, the default scenario is that contractors deduct 20% of your pay and send it straight to HMRC. This is supposed to cover your tax and national insurance contributions.
But here’s the kicker: if you get CIS gross status, contractors won’t make these deductions. You’ll get paid in full, and it’s up to you to sort out the tax with HMRC. Sounds good, right? Let’s crack on with why it matters.
Why you need CIS gross status
So, why should you bother getting CIS gross status? Here’s the lowdown.
Cashflow benefits
When contractors deduct 20% from your payments, it can seriously mess with your cashflow. If you’re operating on tight margins (and who isn’t these days?), that missing chunk of cash can mean the difference between staying afloat and going under. With gross status, you get all your dosh upfront, which makes managing your finances a whole lot easier.
Professional image
Having CIS gross status can also boost your reputation. It shows you’re on the ball with your tax affairs, and contractors might see you as more reliable. It can even help you win more contracts because some firms prefer working with subcontractors who have their gross status.
Reduced admin hassle
Without gross status, you might end up overpaying your tax through those 20% deductions. Then you’ve got to faff around claiming it back from HMRC, which can be a right pain. Gross status simplifies this, meaning less admin and fewer headaches.
How to get CIS gross status
Alright, you’re sold on the benefits. How do you get this coveted status? Here’s a quick rundown.
Meet the criteria
To get CIS gross status, you need to meet certain conditions. You must:
- have paid your tax and national insurance on time
- prove that your business is run through a bank account
- show a turnover of at least £30,000 per year (excluding materials) or an average annual turnover of
- £30,000 over the past three years.
Apply to HMRC
You can apply for gross status when you first register for CIS or at any time after. The application process is pretty straightforward. You can do it online or by post. If you’re unsure about anything, give us a shout – we’re here to help.
Maintain your status
Once you’ve got gross status, you need to keep it. This means staying on top of your tax payments and keeping your business records up to date. HMRC will review your status regularly, so don’t slack off.
Common pitfalls and how to avoid them
Getting and maintaining CIS gross status isn’t a walk in the park. Here are some common pitfalls and how to dodge them.
Late tax payments
Missing a tax payment can jeopardise your gross status. Set reminders, use accounting software or get an accountant (like us!) to help you stay on track.
Incomplete records
HMRC expects you to keep detailed records of your income and expenses. If your books are a mess, they might revoke your gross status. Keep everything tidy and organised.
Ignoring HMRC reviews
HMRC will review your status periodically. If they contact you, don’t bury your head in the sand. Respond promptly and provide any information they need.
Why work with us?
At For The Trade, we’re passionate about helping local businesses thrive. We’ve got the expertise to guide you through the CIS maze and ensure you get the most out of your gross status. We’re not just about crunching numbers – we’re about supporting your business every step of the way.
We know our stuff
We’ve helped loads of subcontractors secure CIS gross status and keep it. We know what HMRC is looking for and how to present your case in the best light. You’re in safe hands with us.
We speak your language
No jargon, no nonsense – just clear, straightforward advice. We’ll explain everything in plain English (with a bit of Geordie charm thrown in for good measure).
We’re here for you
Got a question or a problem? Just give us a ring or pop in for a cuppa. We’re always here to help, and we’re genuinely excited about seeing your business succeed.
What’s the craic?
CIS gross status can be a game-changer for subcontractors in the construction industry. It improves your cashflow, enhances your professional image and cuts down on admin hassle. While the application process might seem daunting, the benefits are well worth it.
If you’re ready to take the plunge, or if you’ve got any questions, get in touch with us. We’re here to help you every step of the way. Let’s make your business the best it can be!
Talk to us about the CIS.