Umbrella CIS

Processing CIS Subcontractors as an umbrella company is significantly less complex than doing so under the PAYE scheme.

You are essentially paying the subcontractors as normal, with the relevant CIS deductions made, and also making a deduction for your fee.

We support two methods of doing this:

• Pre-Tax Fee: You charge a fee to the subcontractor that reduces the total amount subject to a CIS Deduction.
• Post-Tax Fee: Your fee is applied after the CIS Deduction is calculated.

The method you choose will affect how you set up the software.

Pre-Tax Fee

This is the simplest method.

Create a new paycode, set the type as ‘Deduction’ and ensure you tick the box to say it is subject to Tax.

Process pay as usual and add a deduction for the fee using the code you’ve just created.

Post-Tax Fee

Create a new paycode, set the type as ‘Deduction’ and ensure you un-tick the box to say it is subject to Tax.

Now enable the Umbrella Settings. Most of the options here are irrelevant as they’re for PAYE. The setting you are interested in is the ‘CIS Fee Code’. Set this to the code you just created and save your settings.

You now run payruns as usual and add a deduction for the fee using the code you’ve just created.

The total payment amount reported on the CIS300 will be the amount before your fee is deducted.

Notes

• You might want to automate the inclusion of the fee deduction on every payrun by adding it as a default for all new employees.