If you work in construction — as a contractor or a subcontractor — the Construction Industry Scheme (CIS) decides how you get paid and how much tax comes off at source. Here's how it works and how to stop overpaying.
How CIS works
Under CIS, contractors deduct tax from subcontractors' payments and pass it to HMRC. The deduction depends on your registration status:
- 20% — registered subcontractors
- 30% — unregistered subcontractors
- 0% (gross payment status) — qualifying businesses that apply for it
If you're a contractor
- Register as a CIS contractor with HMRC
- Verify every subcontractor before you pay them
- Deduct the right amount and file a CIS return every month
- Give subcontractors deduction statements
Miss a monthly return and penalties start at £100 — and they stack up fast. This is the single most common CIS problem we fix for new clients.
If you're a subcontractor
Those 20% deductions usually overshoot what you actually owe once expenses are counted. That means most subcontractors are due a CIS tax refund at year end — but only if your records are complete and your return is done properly.
How we help
We handle CIS end to end: contractor registration, monthly verifications and returns, deduction statements, and squeezing every penny out of subcontractor refunds. See our CIS Tax service or how we help construction & trade businesses.