Overview

You should register for the Construction Industry Scheme (CIS) if you work for a contractor and you’re one of the following:

a sole trader
the owner of a limited company
a partner in a partnership or trust

Under CIS, a contractor must deduct 20% from your payments and pass it to HM Revenue and Customs (HMRC).

These deductions count as advance payments towards your tax and National Insurance bill.

If you do not register for the scheme, contractors must deduct 30% from your payments instead.

How to register

To register for the Construction Industry Scheme (CIS) you’ll need:

your legal business name – you can also give a trading name if it’s different to your business name
your National Insurance Number
the unique taxpayer reference number (UTR) for your business
your VAT registration number (if you’re VAT registered)

If you’re a subcontractor and a CIS contractor (you pay subcontractors to do construction work), you’ll need to register for CIS as both.

You could be fined if you provide false information and so could anyone who helps you to make a false registration.

Register as a sole trader

If you’re a sole trader and you already have a UTR, you can register for CIS online. You’ll need the Government Gateway user ID and password you used when you registered for Self Assessment (or another government service).

You can apply for gross payment status at the same time.

If you do not have a UTR, register as a new business for Self Assessment and choose ‘working as a subcontractor’ when prompted. You’ll be registered for Self Assessment and CIS at the same time.

You can also call the CIS helpline to register.

Register as another type of business

Fill in the online form for limited companies or the online form for partnerships.

HMRC will register the partnership separately to your sole trader registration. They will need the partnership UTR and trading name.

Ask HMRC online

Ask HMRC’s digital assistant to get a quick answer to your query about the Construction Industry Scheme.

If the digital assistant cannot help you, you can ask to transfer to an HMRC adviser if they’re available.

Phone

Call HMRC if you have a general query about the Construction Industry Scheme.

Before you call (Please be aware that any calls made to HMRC are costly)

This helpline may ask you some security questions. Make sure your personal details and address are up to date in your personal tax account or you could fail telephone security. If you do not already have a personal tax account, you can set one up.

Telephone:
0300 200 3210

Outside UK:
+44 161 930 8706

Opening times:

Our phone line opening hours are:

Monday to Friday: 8am to 6pm

Get paid

To be paid correctly by a contractor, make sure you give them the exact same legal business name or trading name you gave when you registered for the Construction Industry Scheme (CIS). You should also give them your Unique Taxpayer Reference (UTR) so they can verify you.

If you do not, this could affect how much you get paid.

Deduction rates

When a contractor pays you under CIS, they’ll normally make deductions at the standard rate of 20%.

Contractors will make deductions at a higher rate of 30% if:

you are not registered for CIS
they cannot verify you
you give the wrong name for your business

Your contractor should give you monthly statements of payments and deductions. Use them to calculate whether you still owe tax and National Insurance to HM Revenue and Customs (HMRC) or are due a refund.

Gross payment status

You can apply for gross payment status when you register for CIS. This means the contractor will not make deductions from your payments and you’ll pay all your tax and National Insurance at the end of the tax year.

What does not count as your pay

Contractors will not make a CIS deduction from amounts you charge on your invoice for:

VAT
equipment which is now unusable (‘consumable stores’)
plant hired for the job
manufacturing or prefabricating materials
materials that you have paid for directly

Your contractor may ask you for evidence (for example, receipts) that you directly paid for materials. If you do not have any evidence, the contractor will estimate the cost of the materials.

Pay tax and claim back deductions

When you’re registered with the Construction Industry Scheme (CIS), you’re still responsible for paying the correct tax and National Insurance for your business, even if deductions have been made by contractors throughout the year.

Contractors will give you a monthly statement of what they’ve paid you and deductions they’ve made to help with your accounting.

Sole traders and partners

At the end of the tax year, send in your Self Assessment tax return as usual. You should record:

the full amounts on your invoices as income
any deductions contractors have made in the ‘CIS deductions’ field

HM Revenue and Customs (HMRC) will work out your tax and National Insurance bill and take off any deductions made by contractors.

If you still owe tax after this, you’ll need to pay it by 31 January following the end of the tax year.

If you’re due a tax refund, HMRC will pay the money back.

Limited companies

If you have gross payment status, declare all your income in your Corporation Tax return as usual.

If you pay CIS deductions, you must claim these back through your company’s monthly payroll scheme. Do not try to claim back through your Corporation Tax return – you may get a penalty if you do.

Send your monthly Full Payment Submission (FPS) as usual to HMRC.
Also send an Employer Payment Summary (EPS). Enter the total CIS deductions for the year to date.
HMRC will take your CIS deductions off what you owe in PAYE tax and National Insurance. Pay the balance by the usual date.

If your company’s PAYE bill for the period is reduced to zero and you still have some CIS deductions you have not been able to claim back, carry these forward to the next month or quarter (in the same tax year). Tell HMRC in the EPS that you have nothing to pay.

If HMRC thinks your claim is wrong

HMRC may ask you to provide evidence for your CIS deductions or to change your claim.

If you do not do this by the deadline they give you, HMRC will correct your claim and you will not be able to make any more claims in that tax year.

You can appeal HMRC’s decision. They’ll tell you how to do this.

Keep records

Your company must keep a record of amounts claimed back against your monthly or quarterly PAYE bill.

You can use form CIS132 to do this or keep your own records.

If you paid too much in CIS deductions

HMRC will pay back any deductions your company has not been able to claim back from its PAYE bill during the tax year.