Estimated reading time: 3 minutes
Introduction
If you work in the construction industry, there’s a good chance the Construction Industry Scheme (CIS) applies to you. Whether you’re a contractor paying subcontractors or a subcontractor carrying out construction work, understanding your responsibilities is essential to remain compliant with HMRC.
Key Points at a Glance
- CIS applies to most construction work carried out in the UK.
- Contractors must register for CIS and verify subcontractors before making payments.
- Registered subcontractors usually have 20% deducted, while unregistered subcontractors generally have 30% deducted.
- Some subcontractors may qualify for gross payment status.
- Contractors must submit monthly CIS returns and keep accurate records.
What is the Construction Industry Scheme?
The Construction Industry Scheme (CIS) governs how contractors make payments to subcontractors for construction work. Contractors may need to deduct tax from payments and pay these deductions to HMRC on the subcontractor’s behalf.
The scheme commonly applies to:
- Site preparation
- Building work
- Alterations and extensions
- Repairs and maintenance
- Demolition
- Decorating and finishing work
Who Needs to Register?
Contractors
Businesses paying subcontractors for construction work usually need to register for CIS. Some non-construction businesses may also qualify as deemed contractors.
Subcontractors
Although registration is not compulsory, registered subcontractors generally benefit from lower CIS deductions.
How Are CIS Deductions Made?
HMRC will confirm the deduction rate after the contractor verifies the subcontractor.
- Gross payment (0%) for approved subcontractors.
- 20% deduction for registered subcontractors.
- 30% deduction for unregistered subcontractors.
What Are a Contractor’s Responsibilities?
- Register with HMRC.
- Verify subcontractors.
- Deduct and pay CIS correctly.
- Submit monthly CIS returns.
- Keep accurate records.
What Are a Subcontractor’s Responsibilities?
- Register with HMRC if appropriate.
- Keep accurate business records.
- Retain payment statements.
- Complete annual tax obligations.
- Claim credit for CIS deductions.
How We Can Help
We can help register you for CIS, verify subcontractors, submit monthly returns, maintain compliant records and ensure you meet all HMRC reporting obligations.
Further Reading (HMRC)
- Construction Industry Scheme (CIS): CIS340 – https://www.gov.uk/government/publications/construction-industry-scheme-cis-340
- Construction Industry Scheme: A Guide for Contractors and Subcontractors – https://www.gov.uk/government/publications/construction-industry-scheme-cis-340/construction-industry-scheme-a-guide-for-contractors-and-subcontractors-cis-340
- Construction Industry Scheme detailed guidance – https://www.gov.uk/government/collections/construction-industry-scheme-cis-detailed-information
Disclaimer
This article is intended as general guidance only and is based on HMRC guidance available at the time of writing. Tax legislation and HMRC guidance may change, and individual circumstances differ. Please contact us if you require advice specific to your situation.
Last reviewed: July 2026
