Who Does the Construction Industry Scheme (CIS) Apply To?
Contractors
Businesses or individuals that pay others for construction work.
Includes property developers, building firms, and larger companies commissioning construction projects.
Subcontractors
Individuals or businesses that are hired by contractors to do construction work.
How CIS Works
Contractors take money from subcontractors' payments and send it to HMRC. These deductions are prepayments for the subcontractor's tax and National Insurance.
What Work is Covered?
CIS applies to most construction work in the UK, including:
Site preparation (e.g., laying foundations, demolition).
General building (e.g., bricklaying, roofing).
Alterations and repairs.
Installation of systems (e.g., heating, lighting).
Exclusions include:
Surveying, architecture, and other professional services.
Manufacturing or delivering construction materials.
Key Requirements
Contractor Obligations:
Verify subcontractors' CIS registration status with HMRC.
Deduct the right amount (20% for registered subcontractors; 30% for unregistered).
File monthly returns and keep records.
Sub-contractor Obligations:
Provide accurate information to contractors to avoid higher deductions.
Deductions:
20%: Standard rate for registered sub-contractors.
30%: For unregistered sub-contractors.
0%: For sub-contractors with "gross payment status" (who meet specific turnover, compliance, and record-keeping criteria).
How to Register for CIS
Contractors: Register with HMRC via their website or by phone.
Sub-contractors: Register online, or HMRC will process it automatically if your contractor verifies you.
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