Construction Industry Scheme (CIS) Tax

Construction Industry Scheme (CIS) is where contractors deduct money from a subcontractors payments and pay it to HMRC on the subcontractors behalf.

These deductions from the subcontractors are advance payments towards the subcontractor’s Tax and National Insurance.

Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate of 30% (rather than 20%) if they’re not registered.

Contractors

You must register as a contractor if either:

  • you pay subcontractors for construction work
  • your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period

Please click here to register as a contractor with HMRC.

Subcontractor

You can register as a subcontractor (in order to prevent having the higher rate of deductions being deducted from you) if you do construction work for a contractor. Please click here to register as a contractor with HMRC

You must register as both if you fall under both categories.

CIS covers most construction work to buildings, including site preparation, decorating and refurbishment, however there are a few exceptions. You don’t have to register if you only do certain jobs, including:

  • architecture and surveying
  • delivering materials
  • carpet fitting
  • scaffolding hire (with no labour)
  • work on construction sites that is clearly not construction, eg running a canteen or site facilities

Please click here the view the HMRC guide which explains CIS in more detail and it contains an the full details of what is and isn’t covered by the scheme.