What is CIS?

The Construction Industry Scheme (CIS) was first introduced in 1971 (named the Construction Industry Tax Deduction Scheme) in order to combat tax evasion in the construction industry. This is done by contractors deducting money from a subcontractor’s payments and passing it onto HM Revenue and Customs on their behalf. The deductions are then considered as advance payments towards the subcontractor’s tax and NI throughout the year.

What do I need to do as a contractor?

Contractors must register for the scheme, and you are deemed to be a contractor if you satisfy one of the following:

• You pay subcontractors for construction work
• Your business does not do construction work, but you have spent more than £3 million on construction in the 12 months since you made your first payments.

What do I need to do as a subcontractor?

Subcontractors do not need to register for the scheme. However, deductions are taken at a higher rate if they are not registered. You are deemed a subcontractor if you do construction work for a contractor

What are the rates deducted from a subcontractor?

If you are registered as a subcontractor the deduction rate is 20% (unless you are large enough to be given the 0% “gross” status rate). If you are not registered the deduction rate is 30%.

Are they any jobs where I do not need to register for CIS?

As CIS covers most construction work, here are a few exceptions that do not require you to register for CIS if you only do the following jobs:

• Architecture and surveying
• Scaffolding hire (no labour)
• Carpet fitting
• Making materials (including plant and machinery) that are used in the construction industry
• Delivering materials

If you have any questions about the Construction Industry Scheme or need help registering for CIS feel free to contact us.

Disclaimer - All information in this post was correct at time of writing.