If you are a contractor or a sub-contractor in the construction industry, you’ve probably heard that from 19 April 2016 the UK Government is implementing a range of improvements to the CIS legislation.
The improvements were announced in the Autumn Statement 2014 to reduce the administrative and cost burden on construction businesses.
In particular, the new legislation will help businesses to achieve and maintain gross payments status, so that subcontractors can receive payments without deductions.
Last year’s changes - 6 April 2015
- The requirement for contractors to submit a nil return to HMRC where no payments have been made in a tax month was removed
- Relax the requirements for joint ventures to achieve gross payment status where one member already has this status and that company has a right to at least 50% of the assets or income, or holds at least 50% of the shares, or a voting power in the joint venture
- Ability to make early repayments to liquidators in case of insolvency
Upcoming changes – 19 April 2016
- Mandatory online filing: Contractors won’t be able to submit paper returns, except in the following circumstances: if you are not able to access a digital channel by reason of age, disability, remote location or religious objection
- Director’s self-assessment filing requirements will be removed from the initial and annual compliance tests
- Threshold for the turnover test will be reduced from £200,000 to £100,000 where there are multiple partners or directors
Further changes in April 2017
While contractors are currently able to verify whether sub-contractors can be paid gross online or by phone, from April 2017 mandatory online verification of subcontractors will be introduced, as the option to telephone will be removed. Following the changes that come into effect in April 2016, contractors will still be able to process CIS payments manually, however, it will take longer than in the past.
Worried about the proposed changes?
If you are worried about the legislative changes, please speak to your accountant or a professional advisor.