What is the Construction Industry Scheme (CIS)?

If you work in construction, you’ve probably heard people mention the Construction Industry Scheme. CIS is basically HMRC’s way of keeping tax on track for building and site work. If you work for yourself or pay other people to work for you, CIS comes into play.

Put simply, CIS tax gets taken before your money even hits your account. No wonder so many people feel short during the year and end up owed a CIS tax rebate.

RIFT’s here to make the whole thing feel easy. We’ll show you what CIS means for you and how to keep more of your hard-earned cash where it belongs.

What is CIS and how does it work?

CIS is HMRC’s way of collecting tax from the construction industry without waiting until the end of the year. Your contractor takes CIS tax off your pay each time they pay you. HMRC holds it as advance tax and compares it all at the end of the year.

If too much gets taken, you’ll claim it back in your CIS tax return. If not enough was taken, HMRC balances it out. Most subcontractors end up overpaying, which is why CIS refunds are so common.
If you’ve ever wondered what CIS is, think of it as a system that tries to make tax easier but often leaves subcontractors out of pocket until they claim back what they’re owed.

CIS covers most hands-on construction work like building, demolition, site prep, repairs and groundwork. Some professional roles, such as architects and surveyors, don’t fall under the scheme.

Who needs to register for CIS?

Not everyone in construction has to register, but if you’re a CIS subcontractor, a CIS contractor or both, you’re on the list.

You’re a contractor if you:

• Pay subcontractors for construction work
• Run a business that spends a lot on construction, even if that’s not your main trade

You’re a subcontractor if you:

• Work for yourself
• Take on jobs from contractors
• Get paid per job, per day or per contract

CIS doesn’t apply to employees. If you’re on PAYE, your employer sorts your tax.

If you’re not sure where you fit, don’t stress. It’s not always obvious which box you fall into. That’s normal in construction. We can help you work it out.

How to register for CIS 

Registering for CIS isn’t difficult when you know the steps. Here’s what you’ll do.

1. Register as self-employed if you haven’t already. HMRC will send you a UTR.
2. Complete your CIS registration with HMRC as a subcontractor, contractor or both.
3. Give your UTR and National Insurance number to the contractors you work for so they can verify you.
4. HMRC confirms your status and lets contractors know which rate to use.

Once you’re registered, you can crack on with the job without worrying about HMRC. Check what you’re owed with a quick CIS refund check.

CIS deductions explained

CIS deductions decide how much of your pay you take home each time.

Net payment status at 20%

Most subcontractors sit here. Contractors take 20% CIS tax from each payment. It’s simple, but it often means you overpay and end up due a CIS refund later.

Gross payment status at 0%

With gross payment status, you get paid in full and sort your tax later. You sort your tax later through your CIS tax return. Great for cash flow, but HMRC expects you to stay on top of your paperwork if you want to keep that status.

Not registered at 30%

If you’re not registered, contractors have to take 30%. That’s a big chunk and one of the quickest ways to lose money. Registering early saves you from that hit.

Responsibilities after registering for CIS

Once you’re in the scheme, you’ve got a few things to stay on top of. Nothing scary, just worth knowing. Your responsibilities depend on whether you’re a contractor or a subcontractor.

If you’re a contractor you must:

• Verify every subcontractor you pay
• Deduct the right CIS deductions rate
• File your monthly CIS return
• Keep full records of payments and deductions

If you’re a subcontractor you must:

• Give contractors accurate details so they can verify you
• Keep your deduction statements safe
• File your CIS tax return each year
• Claim back any CIS tax you’ve overpaid

This is where loads of subcontractors discover they’re due a CIS tax rebate.

Common CIS mistakes to avoid

Here are the slip ups we see all the time.

• Registering late or not at all
• Mixing up subcontractor and employee status
• Assuming contractors always get the rate right
• Losing deduction statements
• Applying for gross payment status without knowing what HMRC expects

Dodging these mistakes saves time, stress and often a fair bit of money, so it’s worth getting right from day one.

CIS and your tax refund

CIS tax gets taken before you’re paid. It mounts up fast, and most subcontractors end up paying more than they owe.

You might be due a CIS refund if you’ve had CIS deductions, paid for tools or gear yourself, travelled for work, had gaps between jobs or bounced between CIS and PAYE.

Getting that money back feels good. We’ve helped thousands of construction workers claim their CIS tax rebate with no hassle and no guesswork. Let’s see what you’re owed.

FAQs

What is CIS?

CIS is a set of HMRC rules that tells contractors how much CIS tax to take from subcontractor payments.

Do I need to register for CIS if I’m self-employed?

Yes. If you’re a subcontractor taking on construction work, you need to register.

Do employees come under CIS?

No. Employees are paid through PAYE instead.

What CIS tax rate applies if I’m not registered?

You’ll have 30% taken until you register.

How do I get gross payment status?

You apply through HMRC, and they’ll check you meet their compliance rules.

How do CIS deductions affect my tax refund?

If too much gets taken during the year, you claim it back through your CIS tax return.

What construction work is covered by CIS?

Most hands-on site work is covered. Some professional services aren’t.