How and Why Register for the Construction Industry Scheme (CIS)
You must register under the CIS if you are employed as a contractor, and one of the following applies to you:
- You are the owner of a limited company
- You are self-employed
- You are partnered in a trust or partnership.
As outlined under the CIS, a contractor is required to deduct 20% from all your payments and then send that money to the HM Revenue and Customs (HMRC).
Such deductions will be considered advanced payments that are applied to your National Insurance bill and taxes.
If you fail to register with the CIS, contractors will then be required to withhold 30% of your payments instead.
If you elect not to make deductions to the HMRC in advance through the contractors, you may apply for gross payment status. When you register for CIS, you may choose this option during the registration process.
How to Register
Before you register for the CIS, you should have the following information on hand:
- the legal name of your business. (You may provide a trading name if that is different than your business name.)
- your business’s unique taxpayer reference number (UTR)
- your personal National Insurance Number
- if you are VAT registered, you will also need your VAT number.
If you are both a contractor and subcontractor, you will need to register as both under the CIS.
Sole Trader Registration
If you are considered a sole trader and have a UTR already, you can do online registration for the CIS. To do this, you will need a Government Gateway ID for users and the password that you first used when registering for the Self-Assessment or any other government service through the Government Gateway.
When you are registering, you may sign up for gross payment status.
You must register your new business for a Self-Assessment if you have no UTR. Be sure to select “working as a subcontractor” when you are prompted to do so. In so doing, you will be registered for both CIS and Self-Assessment.
If you require any assistance, you can contact the CIS helpline for registration help.
Registering as Some Other Business Type
HMRC will register your sole trader registration separately from your partnership. To do so, they will require your trading name and the UTR for the partnership.
If you are based abroad, you must still register with the CIS if you are doing construction work within the UK.
Support and Help
If you require support or help with registration, contact the CIS helpline.
You may also sign up for emails and webinars or view instructional and informative CIS videos created by HRMC.
To receive pay correctly from a contractor, you must ensure that you provide them with the same trading name or legal business name you used when registering with the CIS. You may also need to provide your Unique Taxpayer Reference (UTR). Doing so will allow them to verify you.
If you fail to do either, it may impact how much you are paid.
Rates of Deduction
When a contractor pays you under CIS, they will typically make deductions at 20%, which is the standard rate.
At higher deduction rate of 30% will be used by contractors if:
Your contractor should provide you with monthly pay statements as well as a list and amount of deductions. You can use this information to help you estimate what you owe in taxes and National Insurance that must be paid to the HM Revenue and Customs (HMRC). You will also be able to determine if you will receive a refund for overpaying.
Gross Payment Status
You may sign up for gross payment status at the same time you register for the CIS. In so doing, the contractor will make no deductions from your pay, and you will be responsible for paying all your National Insurance and taxes at the conclusion of the tax year.
What is Not Considered Pay
A contractor will not deduct from amounts that you charge for the following:
- Unusable equipment (“consumable stores”)
- Prefabricating or manufacturing materials
- Plant hire required for the job