What the Construction Industry Scheme (CIS) Means for You
If you work in construction and get paid by a contractor, the chances are CIS affects you — even if you're not entirely sure how. Here's a plain-English explanation of what it is, why it exists, and what you need to do.
What is CIS?
The Construction Industry Scheme is a tax deduction system run by HMRC. It applies to contractors and subcontractors working in the UK construction industry. Under CIS, contractors deduct money from a subcontractor's payments and pass it directly to HMRC as advance payment towards the subcontractor's tax and National Insurance.
Does it apply to you?
CIS applies if you work as a self-employed subcontractor in construction — this includes groundwork, roofing, bricklaying, plastering, carpentry, plumbing, electrical work, and many other trades. If you're being paid by a contractor (rather than directly by a homeowner), CIS almost certainly applies.
How does the deduction work?
If you're registered under CIS, your contractor will typically deduct 20% from your labour payments. If you're not registered, that deduction jumps to 30%. The deducted amount is paid to HMRC on your behalf and counts towards your tax bill — so you're not losing it, you're paying your tax early. When you file your Self Assessment, you can reclaim any overpayment.
Registering for CIS
Register as a subcontractor through HMRC's website or by calling the CIS helpline. You'll need your Unique Taxpayer Reference (UTR) number. Registration is free and takes the deduction rate from 30% down to 20% — so it's absolutely worth doing.
Keep your records tidy
CIS makes clean record-keeping even more important. You'll need to track your gross payments, the CIS deductions made, and match these against your tax return at year end. Keeping digital invoices and receipts through a tool like Receev means your records are always organised and easy to access when HMRC or your accountant needs them.
CIS can feel complicated at first, but once you understand how it works it becomes routine. When in doubt, speak to an accountant who works with tradespeople — they'll make sure you're not paying more tax than you need to.
