CIS explained: do you need to register?

The Construction Industry Scheme changes how payments are made and taxed within construction, and getting registration status wrong can cause real cash flow problems.

Who CIS applies to

Broadly, contractors who pay subcontractors for construction work must register as a contractor, and subcontractors receiving those payments should register too, to avoid deductions at a higher rate.

How deductions work

Contractors deduct a percentage from subcontractor payments and pass it to HMRC, effectively as an advance on the subcontractor's tax bill — the deduction rate is lower for registered subcontractors than unregistered ones.

Common mistakes

Misclassifying someone as a subcontractor when they're really an employee, or failing to verify a subcontractor's registration status before paying them, are frequent sources of HMRC enquiries.

Our advice

We handle CIS registration, verification and monthly returns for construction clients, so deductions are correct from the first payment rather than corrected after an HMRC query.