Under the Construction Industry Scheme (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.
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 not registered.
Who counts as a contractor or subcontractor
Register as a contractor if either:
- 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.
You must register as both if you fall under both categories.
Work covered by CIS
CIS covers most construction work to:
- a permanent or temporary building or structure
- civil engineering work like roads and bridges
For CIS, construction work includes:
- 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
Exceptions
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
The CIS guide for contractors and subcontractors has more detail on what is and is not covered by the scheme.
