What is Construction Industry Scheme? (CIS)

The Construction Industry Scheme (CIS) requires contractors to take out taxes and National Insurance from payments they make to subcontractors. These deductions help subcontractors pay their taxes and insurance gradually throughout the year, instead of all at once at the end of the tax year

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Who Does it Apply to?

CIS applies to both contractors and subcontractors. If you’re a contractor, you must sign up for CIS. You’re considered a contractor if you hire subcontractors for part of your work or if you’ve spent over £3 million on construction in the last year.

Subcontractors don’t have to register for CIS, but it can be helpful. If you do register, HMRC will deduct taxes at 20% instead of 30%, so you’ll pay less every month.

This scheme doesn’t cover payments to employees, which are managed through the PAYE system.

What Work Falls under CIS?

CIS includes most types of construction work, such as:

a permanent or temporary building or structure
civil engineering work like roads and bridges

For the purpose of CIS, construction work includes:

preparing the site – for example, laying foundations and providing access works
demolition and dismantling
building work
alterations, repairs and decorating
installing systems for heating, lighting, power, water and ventilation
cleaning the inside of buildings after construction work

How to Register?

Check out more details of our CIS Payroll solution for hirers and contractors.

Contractors

Sign up for CIS before hiring subcontractors. You’ll need to register as a new employer with HMRC and get a PAYE reference number. Make sure to check if you should be employing someone instead of subcontracting, or you might face penalties.

After registering, deduct taxes from subcontractors’ pay and file monthly returns. Keep CIS records to avoid penalties.

Subcontractors

Subcontractors can register online with their government gateway ID, password, and Unique Tax Reference number (UTR). You can register for Self Assessment and CIS together if you’re new.

If you don’t register for CIS, you’ll be charged a 30% tax rate, while registering saves you 10%.

Calculate your net take home pay with our CIS calculator.

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Frequently Asked Questions

Can I Cancel or De-Register from CIS?

If you’ve stopped trading or working with subcontractors, you can reach out to HMRC to deregister from CIS. It’s important to keep HMRC updated about any changes that might impact your CIS registration, such as:

Changes to your address or business structure, or if a contractor passes away
Ceasing trading or subcontractor use

If you’ve stopped working with subcontractors, contact HMRC to deregister from CIS. If it’s a temporary change, you can submit an inactivity request instead. Remember to submit monthly CIS reports until your cancellation request gets approved.

Who Doesn’t Have to Register for CIS?

If your construction work fits into any of these categories, you don’t have to sign up for CIS:

Scaffolding hire (not the labor itself)
Carpet fitting
Architecture and surveying
Work paid for by a charity, trust, governing body, or head teacher of a maintained school (via the local education authority)
Work on a property for your business use (excluding properties for sale or rent)
Construction contracts worth less than £1,000, excluding materials (you’ll need to call the CIS helpline to request an exemption)

For more information on CIS exemptions, take a look at this official guide.

Can I Request a Refund Online?

You can request a CIS tax refund online if you’re a subcontractor for a limited company, or an agent of one, and you’ve paid more tax or National Insurance than you owe. To claim online, you’ll need:

Company name, phone number, and UK address
PAYE reference numbers
Company Unique Tax Reference number (UTR)
The estimated overpayment amount

For further details on claiming a CIS refund, visit the gov.uk website.