We use cookies to help make this website better, to improve our services and for advertising purposes. By accepting this message or continuing to browse our site you agree to accept cookies. To find out more read our Cookie Policy. Accept
Knowledge Base Getting Started Frequently Asked Questions Webinars

CIS: contractors

Here's how to enter transactions into FreeAgent if you're a CIS contractor.

You'll receive bills from your subcontractors, but you won't pay the full amount of that bill to the subcontractor. Part of it will be paid to HMRC.

1. Create a bank account

First create a new bank account in FreeAgent and call it, for example, "CIS deductions".

It won't have a sort code or account number so you can leave those fields blank.

KB-T-CIS-CC-01-Final.png

KB-T-CIS-CC-02-Final.png

2. Enter the subcontractor's bill

Your subcontractor will present you with a bill which you need to enter in FreeAgent as normal, in full.

Let's say the bill is for £400 and you're going to pay your subcontractor £300 and then pay £100 to HMRC.

Post the bill for £400.

KB-T-CIS-CC-03-Final.png

3. Pay off the bill

When you pay your subcontractor, you'll see a payment of £300 coming out of your main bank account.

Don't explain this as a bill payment. Instead, explain it as a transfer from your main account to the CIS bank account.

KB-T-CIS-CC-04-Final.png

4. Add a manual bill payment

Then enter a manual bill payment from the CIS bank account for £400, to pay the bill off in full. This is so that your accounts won't have a permanent unpaid bill sitting in Aged Creditors.

KB-T-CIS-CC-05-Final.png

5. Pay the tax

When you pay the CIS tax from your main bank account, explain that as a Payment with type PAYE / NI, because that's how you'll pay HMRC.

KB-T-CIS-CC-06-Final.png

6. Net off the PAYE and CIS account

That will leave your PAYE account showing a debit of £100 and the CIS bank account showing a credit of £100. We need to net these off, and the best way to do that is by going into the CIS bank account and entering a manual transaction, a refund, of £100, with type PAYE / NI.

KB-T-CIS-CC-07-Final.png

Here's what your bank account will look like after you've posted all these transactions...

KB-T-CIS-CC-08-Final.png

... and your CIS deductions account.

KB-T-CIS-CC-09-Final.png

Further information about the CIS is available from HMRC.

Did you find this article useful?

I need help with…

View all categories →