What is CIS Payroll and Why You Should Outsource?
CIS or the Construction Industry Scheme payroll is the processing of payments from contractors to subcontractors involved in a construction project. If you are someone who has subcontractors working under them or have spent over a million in the past 3 years on construction projects, then you are a contractor.
You can be a contractor with no subcontractors, and you can be both a subcontractor working under a contractor and have more subcontractors working under you. CIS or the Construction Industry Scheme covers tax and legal obligations required to be fulfilled by both contractors and subcontractors and applies to both individuals and organizations working as either of them.
Most small contractors or those with large in-house teams opt to manage the CIS payroll and the related activities within their organizations. This not only helps cut down the extra expenses but also works with trust among peers. But handling CIS payrolls in a long run is unadvisable if you do not have a specialized CIS payroll team in your organization.
Here is why you should outsource your CIS payroll to a CIS payroll company
- No Cost for Upskilling
You may be working in the industry for a while with staff trained specifically in the PAYE payroll scheme. Suddenly, you become eligible for the CIS payroll and things get tricky. Do you upskill your employee and enable them in handling the CIS payroll? Or do you pay a nominal fee to another company for their CIS payroll services?
Upskilling your employees in one specific government mandate is expensive and requires a fair share of time and resources that could easily be spent on other important tasks while the experts are taking care of the CIS payroll.
- Strain on In-house Teams
There can be a situation where either the contracting firm does not have a dedicated in-house payroll department or the team that they have is already working at full capacity. In such situations, it is better to take away the extra workload and hand them over to the experts. Not only will you get better results in the CIS payroll process execution, but you will also get to streamline the internal resource allocation.
- Eligibility Changes
Several subcontractors hire more subcontractors under them depending on the size of the project they are pursuing. In doing so, they become eligible for the CIS payroll. If a subcontractor in such a situation is not expecting to operate frequently as a contractor, it is better to hire a CIS payroll company to process and manage the payments instead of unnecessarily spending on setting up an in-house department.
What Should You Keep in Mind?
Several financial and legal obligations are covered under CIS payroll:
- All the subcontractors should be paid the legal minimum wage at the least.
- Some subcontractors are automatically enrolled in the government pension scheme, so you do not need to necessarily match their contributions
- There are no provisions for paternity or maternity pay, holiday pay, and sick pay.
- The legislation surrounding CIS are prone to frequent changes so it is better to have a specialist CIS company in the contract.