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Construction Industry Scheme


Construction Site

The Construction Industry Scheme (CIS) is a tax deduction scheme implemented by HMRC in the UK. If you're involved in construction work, understanding CIS is crucial to ensure smooth operation and avoid any tax-related issues.


  • You are responsible for deducting a percentage (either 20% or 30%) from subcontractors' payments.

  • This deduction is considered an advance payment towards their income tax and National Insurance contributions.

  • You must register with HMRC for CIS before hiring subcontractors.

  • You need to verify the subcontractor's registration status with HMRC before making payments.

  • Report deducted tax to HMRC through monthly returns.


  • You may be registered with CIS, allowing you to receive payments without tax deduction at a higher rate (20%).

  • If not registered, contractors will deduct a higher percentage (30%) from your payments.

  • Registering with CIS allows you to reclaim deducted tax through your Self Assessment tax return.

  • Keep accurate records of all your construction work and payments received.

Benefits of CIS Registration (for Subcontractors)

  • Receive gross payment without tax deduction (at 20%).

  • Easier to manage your finances and cash flow.

  • May access certain contractual opportunities that require CIS registration.


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  • Ignorance of CIS regulations can lead to penalties for both contractors and subcontractors.

  • HMRC provides resources and guidance on CIS.

  • Consider seeking professional advice from an accountant if you have complex CIS queries.

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