If you’re in the UK construction business, you’ve likely heard about CIS. A lot of new workers don’t know that being paid under the Construction Industry Scheme isn’t automatic. If you’re a bricklayer, electrician, or even a small team leader, registering for CIS as a subcontractor keeps you in line with HMRC rules. It also makes sure you get paid the correct amount. If you don’t, you could lose a lot of your income because of higher tax deductions.
This guide explains how to register for CIS as a subcontractor, whether you’re on your own or have a limited company. Getting it right from the beginning can prevent problems down the road.
HM Revenue and Customs (HMRC) established the Construction Industry Scheme (CIS) to control how contractors compensate subcontractors in the building industry. Contractors are required by CIS to take money out of subcontractors’ payments and send it straight to HMRC. These deductions are applied to the subcontractor’s income tax and national insurance premiums in advance.
The majority of construction work is covered by CIS, including:
• Site preparation and building work
• Electrical and plumbing installation
• Demolition, repairs, and renovations
• Painting, decorating, and finishing tasks
According to CIS, you are a subcontractor if you perform construction work for a contractor but are not paid by them.
By registering with CIS, you can be sure that your deductions will be made at the standard rate of 20% rather than the higher rate of 30% for unregistered employees. Additionally, it facilitates accurate income management at the end of each tax year and the recovery of overpaid taxes.
You must register as an individual if you work as a self-employed subcontractor, such as an electrician, builder, or decorator. Although the procedure is simple, proper documentation is necessary.
You have to notify HMRC that you are self-employed before you can join CIS.
• Register online through the HMRC Self Assessment registration page.
• Provide your name, address, National Insurance number, and business type.
• After registration, you’ll receive a Unique Taxpayer Reference (UTR) by post. This is necessary for both CIS registration and any subsequent interactions with HMRC.
After receiving your UTR, sign up for CIS using:
• Your HMRC online account, or
• The CIS helpline is at 0300 200 3210.
You will be required to verify if you are registering as a contractor, subcontractor, or both. To finish the process, enter your UTR, company name, and contact details.
Following registration, HMRC will notify you of your deduction rate and verify your CIS status.
When you begin working for a contractor, provide them with your:
• UTR
• National Insurance number
• Business name
To make sure the proper deduction rate (20%) is applied, the contractor will confirm your CIS registration with HMRC. If you are not registered, a 30% deduction will be made automatically.
Your contractor is required to provide you with a payment and deduction statement each time you are paid, which must include:
• The total amount paid
• The cost of the materials you supplied
• The amount of tax deducted under CIS
Keep all these statements safe. At the end of the year, you will need them to file your Self Assessment tax return. You can also get support through our Bookkeeping services to track these deductions more effectively.
Every year, you have to use Self Assessment to report all of your income and expenses to HMRC. CIS deductions are applied to your overall tax liability. Once you file your return, you will get your money back if you overpaid.
Maintaining accurate documentation, such as invoices, receipts, and deduction statements, facilitates the process and helps you prevent mistakes.
Stay compliant and make sure every deduction counts
If you operate through a limited company, CIS registration applies to your company rather than to you personally. Compared to registering as an individual, there are a few more steps in the process.
Start by registering your business with Companies House.
You’ll receive:
• A Company Registration Number (CRN)
• A Corporation Tax UTR from HMRC shortly after incorporation
You can register your company online through Companies House.
To run PAYE (Pay As You Earn) for director salaries, HMRC requires you to register as an employer, even if you are the only employee in your business.
You will receive a PAYE reference number from HMRC after registering, which is required for CIS registration.
Once you have your PAYE and UTR information, you can use your HMRC online account to register your business for CIS.
You’ll need to provide:
• Company name and trading address
• Company UTR
• PAYE reference number
• Contact details of the company director
Following processing, HMRC will verify the CIS registration of your business.
Provide your contractors with the following:
• UTR
• Company name
• Company registration number
The contractor will verify your company’s CIS status with HMRC. Once confirmed, deductions are made at the 20% standard rate. If your company isn’t registered, deductions will be made at 30%.
Every time your business receives a CIS payment, the contractor is required to submit a deduction statement detailing the amount paid and the amount of tax deducted.
You must submit monthly CIS returns through your HMRC account, outlining all payments and deductions made to your subcontractors, if your business also employs subcontractors.
If limited companies don’t have employees on payroll, they can request refunds directly from HMRC or deduct CIS from their monthly PAYE and National Insurance obligations.
CIS-registered businesses are required by HMRC to maintain records for a minimum of three years, including:
• Invoices and receipts
• Payment and deduction statements
• Subcontractor verification details (if applicable)
Accurate records help during audits, refund claims, or tax return preparation, and prevent compliance issues.
Unknowingly, a lot of subcontractors make mistakes that result in unneeded tax deductions or payment delays. Here are some important things to be aware of:
• Failing to register before starting work: This leads to higher tax deductions that can take months to recover.
• Mixing business and personal accounts: Always keep finances separate for clearer records and simpler tax filing.
• Ignoring CIS statements: Every deduction should be recorded and checked. Discrepancies can be corrected early if you review them regularly.
• Not updating HMRC: If your address, business name, or trading structure changes, inform HMRC immediately to keep your records accurate.
Paying attention to these details can save time, money, and stress when dealing with tax filings later in the year.
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