The short version: The Construction Industry Scheme (CIS) is how HMRC collects tax from self employed construction workers. If you’re a subcontractor in the building trade, this applies to you.
Why does it exist?
Back in the day, subcontractors were paid cash in hand and HMRC had no way to track what was owed. CIS was introduced so that tax gets deducted at source, before you receive your pay.
How much gets deducted?
If you’re registered for CIS, the deduction rate is lower than if you’re not. The exact rates are set by HMRC. Either way, the money goes to HMRC and counts towards your tax bill for the year.
Most subcontractors have more deducted than they actually owe. That means when you file your tax return, you’re often due a refund.
Who needs to register?
If you’re self employed and work in construction, you should register. Some contractors won’t hire you unless you’re on the scheme. Employees paid through PAYE don’t need to register.
Working in construction and want to make sure you’re reclaiming everything you’re owed? Let’s make sure you’re set up right.
