Hard hat? Check. High-vis? Check. Tax forms correctly filled in? Maybe…
It could be so easy to easy to break the law when it comes to taxes. All the rules and regulations of being self-employed or owning a construction company, it’s tough to keep on top of it all. Spending most of the day on site, mounds of paperwork when you get in, when do you get the chance to check that all of your tax forms are correctly filled in? Especially when it comes to stuff like the Construction Industry Scheme…
As many of you probably already know, under the Construction Industry Scheme, contractors must deduct 20% from their payments and pass it on to HMRC. They introduced this in order for contractors to deduct money from a subcontractor’s payment. This then counts as an advanced payment towards the sub-contractor’s tax and National Insurance bills.
But, with the busy life of being in the construction industry, it can be a hassle to manage and ensure you’re reporting all of this correctly. And, if you don’t do this, you could actually be breaking the law.
In the eyes of HMRC though, despite all of the things on your plate, this is ultimately up to you to account for.
Therefore, we asked the team at Xero, the UK’s leading cloud accounting software for small businesses for their help. By using their accounting software, you can make sure you are doing things right. One thing that they advised was to ensure that you follow these steps:
1. Calculate the deduction
2. Make the deduction
3. Record details of the payment, materials and deduction
4. Make the net payment to the subcontractor
5. Complete and give the appropriate statement of deduction to the subcontractor
They added: “With Xero’s new CIS feature specifically designed to help those in the construction industry, it enables you to add contractor and subcontractor information.”
“From there, CIS deductions can automatically be calculated before making payments.”
“Alongside this, the feature allows you to automatically produce contractor Monthly CIS Returns and create subcontractor payment and deduction statements.”
“Xero isn’t just limited to making sure you’re not breaking the law when it comes to the Construction Industry Scheme.”
“It can also keep your cash flow healthy by submitting digital invoices with online payment options.”
“You can also track inventory, manage stock, pay staff, send payslips and run reports using the app.”
To find out more about this, and to see whether Xero could help you, head over to xero.com now.