Do I need to register for CIS?

If you’re doing construction work for a CIS-registered contractor, registering is a good idea. Without registration, 30% of your pay will be deducted instead of 20%. Registration is free and straightforward — we can help if you’re unsure how to do it.

What work counts as construction under CIS?

CIS covers a broad range of work: building, repairs, decorating, demolition, site preparation, alterations, and more. If you’re working on a construction site or doing work that’s part of a construction project, it likely falls under CIS.

Can a limited company be a subcontractor under CIS?

Yes. A limited company can be treated as a subcontractor, and CIS deductions will be made from payments to the company. These deductions then interact with the company’s PAYE scheme — often resulting in a rebate.

What's gross payment status?

Gross payment status means you receive the full amount with no CIS deductions. To qualify, you need to meet certain conditions around turnover and tax compliance. It’s worth applying for if you’re eligible, as it improves your cash flow.

How does CIS affect my self-assessment?

The CIS deductions taken from your payments count as tax already paid. When you complete your self-assessment, these deductions are offset against your tax bill — and if more is deducted than you owe, you’ll get a refund.

Why is CIS payroll more complicated?

If you’re a contractor with employees and subcontractors on different pay frequencies, CIS reporting can quickly get messy. Individual deductions need to be calculated and reported correctly for each payment run, and the interaction with PAYE adds extra steps. Professional support often saves time and helps you avoid expensive mistakes.

Construction Industry Scheme (CIS)

Tax deductions and reporting for construction work — handled properly, so you can focus on the job.

Who needs to use CIS?

CIS applies to two groups: subcontractors and contractors.

Subcontractors are people (or companies) doing construction work for someone else. If you’re a bricklayer, plumber, electrician, decorator, or any other tradesperson working for a CIS-registered contractor, you’re likely a subcontractor under CIS.

Contractors are businesses that pay subcontractors for construction work. If you’re hiring tradespeople to work on projects, you’ll need to register as a contractor and make the appropriate deductions from their payments.

Even limited companies can be classed as subcontractors under CIS — it’s not just for sole traders.

What is CIS?

The Construction Industry Scheme is a tax deduction system run by HMRC. When a contractor pays a subcontractor, they deduct a percentage of the payment and send it to HMRC on the subcontractor’s behalf. This counts towards the subcontractor’s tax bill.

The idea is to collect tax at source, rather than leaving it all until the end of the tax year. For subcontractors, these deductions reduce (or sometimes eliminate) what you owe when you file your self-assessment.

What qualifies for CIS?

CIS covers all construction work in the UK, including:

Site preparation and groundwork
Building and construction
Alterations and extensions
Repairs and maintenance
Decorating
Demolition and dismantling

It even extends to offshore structures within UK territorial waters.

When does CIS apply?

CIS applies whenever a contractor pays a subcontractor for construction work. The deduction happens at the point of payment — before the subcontractor receives their money.

Contractors report their CIS deductions to HMRC on a monthly basis — there’s no annual deadline.

Checking CIS status: subcontractors and contractors

If you’re a subcontractor, you’ll need to give your contractor your Unique Taxpayer Reference (UTR) so they can verify your CIS status. If you’re a contractor, you’ll need to check each subcontractor’s status with HMRC before making payments.

How do CIS deductions work?

The deduction percentage depends on the subcontractor’s registration status:

Gross payment status (0%) — You receive full payment without deductions. To be eligible, you need to meet certain turnover and compliance requirements.
Standard rate (20%) — The most common rate for registered subcontractors.
Unregistered (30%) — If you’re not registered for CIS, contractors must deduct 30% from your payments.

The difference between 20% and 30% adds up quickly. Registering is straightforward and worth doing if you work in construction.

CIS for subcontractors

You’ll need to show the gross (before deduction) amount and the CIS deduction separately on your invoices. This information is part of your self-assessment at the end of the year.

CIS for contractors

You’re responsible for verifying each subcontractor’s status, applying the correct deduction rate, reporting to HMRC, and paying the deducted amounts.

Why does CIS matter?

Getting CIS wrong can be expensive

Contractors face penalties for incorrect reporting or failing to make the right deductions. Subcontractors who don’t register end up losing 30% of their pay instead of 20% — money that’s harder to reclaim later.

CIS also interacts with other parts of your tax affairs

If you’re a limited company working as a subcontractor, CIS deductions affect your PAYE scheme and can lead to a rebate. If you’re running payroll for a construction business, CIS adds another layer of complexity.

For many people in construction, CIS is just one of those things you have to deal with. But it doesn’t have to be confusing — with the right support, it becomes routine.

Construction Industry Scheme (CIS)

CIS registration support
Guidance on deduction rates and gross payment status
Integration with your self-assessment return
Help reclaiming overpaid tax

For contractors running CIS payroll, pricing depends on the complexity of your setup. Get in touch to discuss your needs.

Book a call

Your Construction Industry Scheme (CIS) support with Watmore & Co

Whether you’re a subcontractor trying to make sense of your deductions or a contractor managing payments to multiple tradespeople, we can help.

For subcontractors, we integrate CIS into your self-assessment so your deductions are properly accounted for and any overpaid tax is reclaimed.

For contractors, we handle the reporting and help you stay on top of your obligations — particularly when payroll gets complicated with different pay frequencies or a mix of employed staff and subcontractors.

CIS reporting has a reputation for being fiddly, especially when it overlaps with payroll. We’re used to navigating these complexities and can take the admin off your hands.