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Set up CIS in QuickBooks Online Bureau Payroll

by Intuit Updated 4 months ago

If you're a business in the construction industry, you may need to use the Construction Industry Scheme (CIS) when managing your payroll. Here's a step-by-step guide on how to set up CIS in QuickBooks Online Bureau Payroll that'll have you up and running in no time.

CIS labour

  1. Go to your Payroll settings.
  2. Select Pay Categories under Pay run settings.
  3. Select Add
  4. Enter "CIS Labour" as the name.
  5. Select both CIS category and CIS deduction.
  6. Leave the CIS type as Other.
  7. If you plan on entering hours worked, set the units as Hourly.
  8. Save the settings.

Note: If your subcontractor has an hourly rate, you can set their rate in Pay run defaults.

CIS materials

  1. Select Add.
  2. Enter "CIS Materials" as the name.
  3. Make sure the CIS category checkbox is selected
  4. Change the CIS type to Materials.
  5. If you plan on entering materials with a fixed rate, set units as Fixed.
  6. Save the settings.

If you have both employees and subcontractors in your organisation and need to pay them accordingly, it's important to create a new pay schedule that includes the term "CIS" in the name.

  1. Go to your Payroll settings.
  2. Within your Pay run settings, select Pay schedules.
  3. Select Add.
  4. Give the pay schedule a name, for example "CIS".
  5. Include any Active subcontractors that you have as employees.
  6. Select the appropriate pay frequency.
  7. Select Save.

Subcontractors will always get a Web format payslip, no matter what is set in your payslip settings. To access your settings:

  1. Go to Payroll, and select Payroll settings.
  2. Within Business settings, select Payslips.
  3. Customise the payslips for your employees.
  4. Select Save.

Now, let's move on to setting up your HMRC settings. To do this, you will need to provide two important pieces of information: your Unique Taxpayer Reference (UTR) and your Real Time Information (RTI).

  1. Go to your Payroll Settings.
  2. Within Business settings, select HMRC Settings.
  3. Enter your Unique Taxpayer Reference (UTR).
  4. Enter your RTI information.
  5. Select Save.

Let's add your CIS subcontractors! Start by gathering their important details such as their names and National Insurance details.

Don't worry if you don't have all the required information at the moment, you can always go back and add more details later as needed.

  1. Go to Payroll, and then select Employees.
  2. Next to Add employee, select the dropdown.
  3. Select Add CIS subcontractor.
  4. Enter the Trading name.
  5. Enter the subcontractor's first name.
  6. Select Next.
  7. Enter the Unique Taxpayer Reference (UTR).
  8. If the subcontractor is a sole trader, enter the National Insurance number. 
  9. Select the appropriate Tax status.
    Note: You can verify or match at this stage, or complete this later.
  10. Select Next.
  11. Select the CIS pay schedule you created in step 2.
  12. Select the CIS Labour pay category your created in step 1.
  13. Select their mode of payment.
  14. Enter the last payment date, or you can leave this blank.
  15. Select Complete.

Edit a subcontractor

  1. Select your subcontractor.
  2. Go to CIS details.
  3. Make the necessary changes.
  4. Remember to select Save.

Make a subcontractor inactive

  1. Select your subcontractor.
  2. Go to CIS details.
  3. Go to the bottom of the page and select Make inactive.
  1. Go to Payroll, and then select New pay run.
  2. Select the CIS pay schedule you created in step 2.
    Note: Unverified subcontractors won't show in the pay run.
  3. Select the contractor's name to view and edit additional information, such as the number of hours worked. If the hourly rate was not specified earlier, you can also add it here.
  4. Select Finalise pay run.

Note: Make sure you complete subcontractor verification before the paid date. You can manually verify subcontractors by providing their verification number. Format the verification number as "V" followed by 10 numbers (for example, V1234567890).

The P32 will be automatically updated, and the CIS tab will show the amount of CIS tax deducted for each tax month.

Every month, at the end of each tax period (which starts on the 6th of one month and ends on the 5th of the next), you need to submit a CIS300 monthly return to HMRC before the 19th. To get this report:

  1. Go to Payroll, and then select Reports.
  2. Within HMRC Reporting, select CIS300 Month returns.
  3. Select the tax year and tax month.
  4. Select Run report.
  5. Check that the information is correct. You will be presented with two sections: CIS300 and Declarations. To proceed with the submission, it is necessary to select the appropriate declaration.
    • Employment status: This confirms the status of each individual has been considered and payments have not been made under employment contracts.
    • Verification: This confirms that subcontractors have been verified by HMRC.
    • Information is correct: This is to make sure that the information submitted is accurate to the best of your understanding.
    • Nil return: This is for CIS submissions with a zero value.
    • Inactivity: Check this box if you won't be paying subcontractors for six months.
  6. You can download the monthly return in three formats:
    • Excel (.xlsx)
    • PDF (.pdf)
    • XML (.xml) is only available once you submit your CIS300 return.

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