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Construction Industry Scheme - FAQ

Created on  | Last modified on 

Summary

Common questions about using CIS in Sage Sole Trader, including setup, deductions, payments, and reporting.

Answers

Do I need a paid plan to use CIS?

Yes. The free plan doesn't include CIS. On the free plan, the CIS card in Settings shows Upgrade now.

If you upgrade and then downgrade later, your existing CIS invoices stay visible. You can't create new ones until you upgrade again.

Can I turn CIS off once it's on?

No, not at account level. Once you turn on CIS in Settings, it stays on.

To stop CIS appearing on future invoices for a contractor, edit the customer record and clear the Is a CIS contractor? checkbox.

Can I retrospectively mark an existing customer as a CIS contractor?

Yes. To apply CIS to an existing customer:

  1. Open the customer record.
  2. Tick Is a CIS contractor?
  3. Save the record.

New invoices for that customer apply CIS. To apply CIS to an existing invoice, open it, tick CIS labour on the relevant lines, and save.

Why do I need to record the full invoice amount, not just what the contractor paid me?

HMRC needs you to report gross income, which is the full invoice value before the CIS deduction. The contractor pays the deducted amount to HMRC on your behalf.

That amount becomes a tax credit at year end and reduces your overall tax bill. Sage records the full gross amount as turnover and tracks the CIS deduction as a tax asset in account 1131.

Why isn't CIS coming off my invoice?

Check these three things:

  • You've turned CIS on in Settings, then Tax settings
  • You've flagged the customer as a CIS contractor
  • You've ticked CIS labour on at least one line item

The CIS labour checkbox is manual. You need to tick it on each line where CIS applies.

Why is CIS only coming off part of the invoice?

This is correct. CIS only applies to lines where you tick CIS labour.

Materials and non-labour lines never include a CIS deduction. If a deduction looks missing, check that you've ticked CIS labour on that line.

Can I change the CIS rate on a single invoice?

Yes. The CIS rate defaults from Settings but you can change it on any individual invoice.

Changing the rate on one invoice doesn't affect the default rate or any other invoices.

When does Sage record the CIS deduction?

Sage records the CIS deduction when you mark the invoice as paid, not when you save the invoice.

If your CIS reports look wrong, first check that you've recorded payment against the invoice.

Should I tick 'Create money-in transaction' when adding a payment?

Only if you don't have a bank feed or imported bank statements.

If the payment comes in through your connected bank feed, leave Create money-in transaction unticked. Ticking it creates a duplicate transaction.

Can I reverse a payment if I made a mistake?

Not in the user interface yet. The current workaround is to post a manual journal that reverses the payment.

An unpay feature is coming soon and will handle this for you.

Where can I see total CIS deducted?

You can view total CIS deducted in several places:

  • The Invoices list, in the CIS deducted column
  • The customer record
  • The Nominal Activity report for account 1131 CIS Tax Asset Realised
  • The Balance Sheet

For Self Assessment, the Income tax summary report shows your full turnover for the SA103.

Does CIS affect my Profit and Loss?

No, not directly. CIS is a tax asset in account 1131, not an expense.

The CIS Tax Asset sits on your Balance Sheet and reduces your tax liability at year end.

I pay CIS to HMRC every month, how do I report this in Sage Sole Trader?

You don't pay CIS to HMRC yourself if you're a subcontractor. Your contractor deducts CIS from the labour portion of your payments and pays it to HMRC for you. They report it on their monthly CIS return.

In Sage Sole Trader, you record:

  • Your gross income before CIS
  • The CIS your contractor deducted

The deduction counts as an advance payment towards your Income Tax at year end. For the steps, see Create a CIS invoice in Sage Sole Trader and Record a payment for a CIS invoice.

Do I have to raise an invoice to track CIS?

Yes. Sage Sole Trader only tracks CIS through CIS invoices. There is no other way to record it.

If you categorise your contractor's payment as Turnover from your bank feed, Sage records only the net amount you received. It does not record the gross invoice value or the CIS your contractor deducted. Your turnover is then too low, and you lose the CIS credit towards your tax bill.

What if I deduct CIS from other subcontractors I pay?

That makes you a CIS contractor. Sage Sole Trader only supports subcontractors.

You're a CIS contractor if you:

  • Pay other subcontractors
  • Deduct CIS from their payments
  • Submit monthly CIS returns to HMRC

Sage Sole Trader doesn't support CIS contractor reporting.