As the leading CIS accountants in London we find ourselves, more often than not, called in to give clarification on how any changes with the taxation system affects businesses within the construction industry. This is never a problem for us, as we firmly believe answering questions from our clients is a very important part of our complete services.
In terms of the above, the most recent development around CIS has been a new levy proposal from the Construction Industry Training Board (CITB). After a quite comprehensive study into the options available, the CITB has proposed a reduction to the PAYE levy rather than the net CIS one as part of a reformed grants scheme.
Under the proposal, the direct workforce PAYE would be cut to 0.35%, down from the present 0.5%. The present net CIS levy applicable to the sub-contract workforce would remain unchanged at 1.25% if the proposals are accepted by the industry.
Whilst some speculated that a change to the CIS rate could be mooted the actual proposal is what we expected. A PAYE rate change is far easier to implement, as it is not subject to the various exemptions and adjustments which can affect CIS calculations. The adjustment being made to PAYE also means it is applied fairly across the industry, and further gives a similarly balanced level of benefit to all businesses involved.
The proposal has now moved to the industry for review and approval. Should there be consensus and agreement from the industry in respect of the change it is presently anticipated that it will be implemented within the next 16 months.
It is, of course, not quite the case that no change to CIS means no actions are required on behalf of businesses. Whilst it might be a simpler and more straightforward change to adjust PAYE as the CITB proposes, amendments must be made to payments, accounting and taxation returns. As the leading CIS accountants in London, our clients know that we will make sure that we implement any and all required change actions on their behalf.