🏗️ Understanding the Construction Industry Scheme (CIS)

If you work in the UK construction sector—whether as a contractor or subcontractor—the Construction Industry Scheme (CIS) affects how you handle tax. CIS is designed to reduce tax evasion by requiring contractors to deduct tax at source from payments to subcontractors. Here’s what you need to know to stay compliant and avoid penalties.

✅ Who Needs to Register?

Contractors:

You must register if you:

• Pay subcontractors for construction work

• Spend more than £3 million on construction in any 12-month period—even if construction isn’t your main business

Subcontractors:

You should register to:

• Avoid higher tax deductions (30% if unregistered vs. 20% if registered)

• Apply for gross payment status, allowing you to receive full payments and handle your own tax

🔨 What Work Falls Under CIS?

CIS applies to most construction operations, including:

• Site preparation and demolition

• Building, repairs, and alterations

• Installation of systems (e.g. heating, lighting, plumbing)

Exemptions include:

• Architecture and surveying

• Carpet fitting

• Scaffolding hire (without labour)

• Off-site manufacturing

💼 How CIS Works

• Contractors verify subcontractors with HMRC before making payments

• Deductions are made from payments and sent to HMRC

• Monthly CIS returns must be filed by contractors

• Subcontractors can offset deductions against their tax bill or claim refunds

📅 Key Responsibilities

For Contractors:

• Register with HMRC

• Verify subcontractors before payment

• Deduct and pay CIS tax

• Submit monthly returns

• Maintain accurate records

For Subcontractors:

• Register with HMRC

• Track deductions for tax returns

• Apply for gross payment status if eligible

🚨 Common Mistakes to Avoid

• Failing to verify subcontractors

• Missing monthly return deadlines

• Misclassified employees as subcontractors

• Poor record-keeping

Penalties can be severe—ranging from fines to interest charges—so it’s vital to stay compliant.

🧮 How We Can Help

At A&T Accountants Ltd, we support contractors and subcontractors with:

• CIS registration and verification

• Monthly return filing

• Tax planning and deduction tracking

• Advice on gross payment status

Whether you’re new to CIS or need help managing compliance, we’ll guide you through every step.

Need help with CIS?
Contact us today to streamline your compliance and protect your business.