What is construction accounting software?
Construction accounting software keeps the books for building firms and handles the Construction Industry Scheme: it verifies subcontractors with HM Revenue and Customs, calculates the 20% or 30% deduction from their pay, files the monthly CIS return and applies the VAT domestic reverse charge on invoices between VAT-registered construction businesses.
Also calledCIS accounting softwareCIS software
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- Return due
- 19th of each month
- Deductions
- 20%, 30% or 0%
- Reverse charge
- Since 1 March 2021
CIS and VAT rules construction software handles
A business that pays subcontractors for construction work registers as a contractor, as does any other business that spends more than £3 million on construction in 12 months. Before paying a subcontractor, the contractor verifies them through HM Revenue and Customs's free CIS online service or commercial software, which is required for more than 50 subcontractors. Deductions are 20% for registered subcontractors, 30% for unregistered ones and 0% for those with gross payment status. The monthly return is due by the 19th, covering the tax month from the 6th, and deductions are paid by the 22nd electronically. Late returns cost £100 at one day, £200 at two months and £300 or 5% of the deductions at six and twelve months. Since 1 March 2021 the VAT domestic reverse charge applies to standard and reduced-rated CIS services between VAT-registered businesses, unless the customer is an end user or intermediary; invoices must say 'reverse charge'. Xero includes CIS calculations on every plan and charges £5 a month to submit contractor returns. QuickBooks files CIS returns at no extra cost on Simple Start and above and has reverse charge VAT codes. Clear Books includes CIS submissions on Medium at £34 a month plus VAT.
Common questions
What are the CIS deduction rates?+
20% for registered subcontractors, 30% for unregistered subcontractors and 0% for subcontractors with gross payment status. HMRC confirms the rate when the contractor verifies the subcontractor.
When is the CIS return due?+
By the 19th of each month for the tax month ending on the 5th. A return one day late costs £100, rising to £200 at two months.
Does Xero do CIS?+
Yes. Every Xero plan calculates subcontractor CIS deductions and produces reports, and submitting contractor CIS returns to HM Revenue and Customs costs £5 a month extra.
Does construction software handle the VAT reverse charge?+
QuickBooks has reverse charge VAT codes at 20% and 5% and applies the charge automatically when one is used. Invoices under the reverse charge must show the words 'reverse charge'.
Accounting software for construction firms
XeroCloud accounting for small businesses with a large app ecosystem.Profile →
Intuit QuickBooksSmall business accounting covering books, invoicing and payroll.Profile →More CIS software
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