Construction Industry Scheme (CIS)

Self-employed individuals in the construction trade pay tax under the Construction Industry Scheme (CIS). Under the CIS, contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

The CIS covers following construction trades:

• preparing the site – for example, laying foundations and providing access works
• demolition and dismantling
• building work
• alterations, repairs and decorating
• installing systems for heating, lighting, power, water and ventilation
• cleaning the inside of buildings after construction work

Contractors must register for the scheme. Subcontractors do not have to register, but deductions are taken from their payments at a higher rate if they are unregistered. The CIS rules mean that the contractor is usually obliged to withhold tax on its payments to you, at either 20% if you are ‘registered’ or 30% if you are ‘unregistered’.

DD Chartered Accountant helps self-employed individuals in the construction trade in meeting Construction Industry Scheme (CIS) requirements. We can guarantee every CIS return is filed on time.

• 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 payment

• Register as a subcontractor if you do construction work for a contractor

One must register for both if they fall under both categories.

You do not have to register if you only do certain jobs, including:

• architecture and surveying
• scaffolding hire (with no labour)
• carpet fitting
• making materials used in construction including plant and machinery
• delivering materials
• work on construction sites that’s clearly not construction – for example, running a canteen or site facilities