Construction Industry Scheme (CIS)

The Construction Industry Scheme (CIS) applies to many payments for construction work in the UK. Construction businesses paying subcontractors generally need to register as contractors. Businesses outside the construction industry may also fall within scope if their construction expenditure exceeds £3 million over a rolling 12-month period, subject to exceptions.

Contractors generally deduct tax from subcontractor payments and pay it to HMRC. These deductions count towards the subcontractor's tax liabilities rather than being a separate tax.

CIS deductions and registration

HMRC verification determines the applicable payment treatment. The usual deduction rates are:

• 20% for registered subcontractors

• 30% for unregistered subcontractors

• No CIS deduction where HMRC confirms gross payment status

Deductions are calculated after excluding VAT and certain allowable costs, such as qualifying materials paid for directly by the subcontractor.

Subcontractors are not generally required to register, but registration normally reduces the deduction rate. Gross payment status requires HMRC approval and does not mean the income is tax-free. Businesses acting as both contractors and subcontractors should register in both capacities.

How we can help

Our services can include:

• Assessing whether CIS applies to your business

• Contractor and subcontractor registration

• Subcontractor verification with HMRC

• Calculating deductions and preparing payment and deduction statements

• Preparing and submitting monthly CIS returns

• Explaining payment amounts and deadlines

• Reviewing CIS deductions suffered and the appropriate tax reporting or offset process

• Assisting with CIS queries and HMRC correspondence

Contractors must also consider workers' employment status: CIS registration does not, by itself, establish that someone is self-employed.

Reporting and payment deadlines

Monthly CIS returns are generally due by the 19th following the end of the relevant tax month. Where no subcontractor payments have been made, contractors normally need to submit a nil return or notify HMRC of inactivity.

CIS deductions are normally payable electronically by the 22nd following the relevant tax month, or the 19th for postal payments. Different payment arrangements may apply where HMRC permits quarterly payments.

We help contractors and subcontractors understand their responsibilities and manage their CIS reporting, with services tailored to the agreed scope of work.