What is the Construction Industry Scheme?
Often mistaken for being an additional tax, CIS is in fact a deduction scheme which is designed to put a stop to fraud and tax evasion within the construction industry.
A contractor will withhold a certain percentage of a subcontractor’s pay (this amount will depend on their CIS status) and then pay it to HMRC – this will then count as advanced payments toward the subcontractor’s tax and National Insurance (NI).
For more information on this, take a look at our CIS page.
Do I have to register for the Construction Industry Scheme?
A contractor must register for the scheme.
A subcontractor doesn’t have to, but by not registering they will be deducted a higher rate of CIS tax.
A subcontractor who is registered will have a 20% deduction rate.
This figure increases to 30% for those who are not registered.
There will also be some subcontractors who have a ‘gross payment’ status set at 0%, in which case you will pay them in full and then it is up to them to pay their own tax and NI at the end of the tax year.
For more information on this, read our Construction Industry Scheme tax rates page.
There may be some circumstances whereby you don’t need to register for CIS – this would be if you:
- Carry out work in architecture or surveying
- Fit carpets
- Make materials used in construction and deliver said materials
- Hire out scaffolding (with no labour)
- Work on a construction site, but it has nothing to do with construction (such as running site facilities)
So, what does count as work covered by the Construction Industry Scheme?
CIS covers the majority of construction work that involves a permanent or temporary building or structure, as well as civil engineering work, such as roads and bridges.
Other examples include:
- Prepping the site for work and cleaning the inside of a building after work has been completed
- Installing systems for heating, lighting, power, water and ventilation
You can find a full list of what counts as work that would be taxed as CIS on GOV.UK
We hope you found this page useful. If you have any further questions on CIS or anything else, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email firstname.lastname@example.org.