Using occasional labour on construction jobs - your CIS obligations

If you are a self-employed tradesperson - a plumber, electrician, builder, decorator, or any other construction worker - and you sometimes pay someone to help you on a job, you may have CIS obligations.

This guide uses real scenarios to help you understand when CIS applies and what you need to do. The rules are the same whether you use help once a year or once a week.

The key question: Are you paying someone else to do construction work?

CIS applies when you pay another person (not an employee) to do construction work. It does not matter how often you do this or how much you pay them. Even paying a mate to help you on one job can trigger CIS requirements.

If you pay someone to do construction work, you become a CIS contractor. This means you must:

• Register as a CIS contractor with HMRC (before you pay them)
• Verify the worker with HMRC (before you pay them)
• Deduct tax from their payment at the correct rate
• File a monthly return to HMRC
• Give the worker a statement showing what you paid and deducted

Scenario 1: "I'm a plumber who sometimes uses a labourer"

The situation: You are a self-employed plumber. Occasionally, on bigger jobs, you bring in a labourer to help with the heavy lifting, digging, or general site preparation. You pay them cash at the end of the day.

Does CIS apply? Yes. You are paying someone to do construction work (labouring on a construction site counts). You are the contractor, they are the subcontractor.

What you must do:

1. Before the first payment: Register as a CIS contractor with HMRC. Do this online at gov.uk/register-employer - it is free and takes about 10 minutes.
2. Before you pay the labourer: Verify them with HMRC using the CIS online service. You need their name, Unique Taxpayer Reference (UTR), and National Insurance number. HMRC will tell you what tax rate to deduct.
3. When you pay them: Deduct tax at the rate HMRC told you (20% if they are registered, 30% if not) from the labour payment.
4. After the tax month ends: File a CIS return by the 19th of the following month and pay the deductions to HMRC by the 22nd.

Example calculation:

You pay your labourer 150 pounds for a day's work. They are registered for CIS (20% rate):

• Gross payment: 150 pounds
• CIS deduction (20%): 30 pounds
• Net payment to labourer: 120 pounds
• You pay 120 pounds to the labourer and 30 pounds to HMRC

Scenario 2: "My mate helped me on a job - I paid him in cash"

The situation: Your friend helped you on a bathroom installation last Saturday. You gave him 100 pounds cash at the end of the day. He does not do construction work regularly - he just helped out as a favour.

Does CIS apply? Yes. The law does not care that he is your mate, that it was a one-off, or that you paid cash. You paid someone to do construction work. That makes you a CIS contractor.

What should you have done:

• Registered as a CIS contractor before paying him
• Verified him with HMRC (or applied the 30% unregistered rate if he has no UTR)
• Deducted tax from his payment
• Filed a monthly return

What happens if you did not: If HMRC finds out, you could face:

• Penalties for not registering as a contractor
• Liability for the tax you should have deducted (you pay it, not him)
• Late filing penalties for missed CIS returns

The bottom line: Even "cash in hand" payments to mates must go through CIS if the work is construction-related.

Scenario 3: "I'm a sole trader but I employ an apprentice"

The situation: You are a self-employed electrician. You have taken on an apprentice who works alongside you. You pay them through PAYE, deducting income tax and National Insurance like a normal employer.

Does CIS apply? No - not for your apprentice. CIS only applies to payments to self-employed subcontractors. Your apprentice is your employee, so you handle their tax through PAYE, not CIS.

But be careful: If you also use other self-employed workers on jobs (not employees), CIS applies to those payments. You can be a PAYE employer and a CIS contractor at the same time.

Scenario 4: "I subcontract work to another tradesperson"

The situation: You are a general builder. A customer asks you to do a kitchen extension. You do the brickwork yourself but hire an electrician and a plumber to do their bits. You pay them directly.

Does CIS apply? Yes. You are paying subcontractors to do construction work. This is the classic CIS situation.

What you must do:

1. Be registered as a CIS contractor
2. Verify both the electrician and the plumber with HMRC before paying them
3. Deduct tax from the labour element of their invoices (not materials)
4. Include both subcontractors on your monthly CIS return
5. Give each of them a payment and deduction statement

What counts as "construction work"?

CIS applies to a wide range of work. It is not just building houses. Construction operations include:

• Building work: New builds, extensions, renovations
• Repairs and maintenance: Fixing roofs, repairing walls, refurbishment
• Decorating: Painting, wallpapering, tiling
• Alterations: Knocking through walls, fitting new windows
• Demolition: Knocking down buildings or structures
• Civil engineering: Groundwork, drainage, paving
• Installing systems: Heating, plumbing, electrics, air conditioning
• Cleaning buildings: During or after construction

What is NOT covered:

• Architecture and surveying (professional services, not physical work)
• Carpet fitting
• Delivering materials (unless you also install them)
• Manufacturing materials off-site
• Work on your own home

How to register as a CIS contractor

Registration is quick, free, and must be done before you make your first payment to a subcontractor.

Verifying your subcontractor - why it matters

Before you pay anyone for construction work, you must verify them with HMRC. Verification tells you how much tax to deduct:

• 0% (gross payment status): The subcontractor has qualified for gross payments. Pay them the full amount. Rare for casual labourers.
• 20% (registered): The subcontractor is registered for CIS. Deduct 20% from the labour payment.
• 30% (unregistered): The subcontractor is not registered, or you cannot verify them. Deduct 30% from the labour payment.

If you skip verification and just pay without deducting tax, you become liable for the tax yourself. HMRC can come after you for the money.

Filing monthly returns - even when you have not used anyone

Once you are registered as a CIS contractor, you must file a return every month - even if you did not pay any subcontractors that month (this is called a "nil return"). Since 6 April 2026 the only alternative is to tell HMRC in advance, at least 14 days before the start of the tax month, that you will not be paying anyone (SI 2026/289).

Returns cover a "tax month" which runs from the 6th of one month to the 5th of the next. For example:

• Tax month: 6 January to 5 February
• Return deadline: 19 February
• Payment deadline: 22 February (electronic) or 19 February (post)

If you know you will not be using subcontractors for a while, you can ask HMRC to set your CIS to "inactive" for up to 6 months. This counts as the advance notification and stops the need for nil returns during that period - but you must request it before the tax month starts, not after.

The penalties for getting it wrong

CIS penalties can add up quickly, especially for small businesses:

Late filing penalties

• 1 day late: 100 pounds (a flat penalty, however many subcontractors you have)
• 2 months late: Additional 200 pounds
• 6 months late: 5% of deductions due or 300 pounds (whichever is greater)
• 12 months late: Another 5% or 300 pounds

Other penalties

• Not registering: You are liable for the tax you should have deducted
• Not verifying: You may have applied the wrong rate
• Poor record keeping: Up to 3,000 pounds if you cannot show records

Key point: If you should have deducted tax but did not, HMRC can make you pay it. You cannot recover it from the subcontractor after the fact.

Practical tips for occasional users of labour

Before you take on any job where you might need help:

1. Register as a CIS contractor - do it once, then you are ready when needed
2. Set up a simple system for tracking subcontractor payments
3. Keep a folder (paper or digital) for CIS records

Before you use someone for the first time:

1. Ask for their UTR and NI number in writing (by text or email is fine)
2. Verify them with HMRC using the online service
3. Tell them what rate you will deduct so there are no surprises

When you pay them:

1. Calculate the deduction (20% or 30% of the labour payment)
2. Pay them the net amount
3. Give them a written statement showing what you paid and deducted
4. Keep records of the payment and deduction

At the end of each tax month:

1. File your CIS return by the 19th (even if it is a nil return)
2. Pay the deductions to HMRC by the 22nd

Common questions from sole traders

"Do I need to use an accountant?"

No, but many sole traders find it easier. If you only use occasional labour, you can manage CIS yourself using the free HMRC online service. But if you are using subcontractors regularly, accounting software that handles CIS can save time and reduce errors.

"What if the person I pay refuses to give me their UTR?"

Apply the 30% deduction rate. You must still verify them (which will fail if they are unregistered) and deduct tax. It is their choice not to register, but you cannot avoid your obligations as a contractor.

"Can I just add the tax to their pay so they get what they expected?"

You can agree a "gross" amount and calculate backwards, but you must still make and report the deduction. For example, if you agree they will receive 120 pounds net (after 20% deduction), the gross payment is 150 pounds and you deduct 30 pounds.

"What if I only use family members?"

Family members are treated the same as anyone else. If they are self-employed and you pay them for construction work, CIS applies. If they are your employees, use PAYE instead.

"I forgot to deduct tax - what now?"

Contact HMRC as soon as possible. You may be able to correct the error. But if you cannot recover the tax from the subcontractor, you will have to pay it yourself. The longer you leave it, the worse it gets.

Record keeping requirements

Keep CIS records for at least 3 years after the end of the tax year they relate to. You need to be able to show HMRC:

• Details of each subcontractor (name, UTR, NI number or company number)
• Verification numbers from HMRC
• Dates and amounts of each payment
• How you calculated deductions (labour versus materials)
• Copies of payment and deduction statements you gave out
• Copies of monthly returns filed

Tip: Take photos of paper records or save emails confirming payments. If you pay by bank transfer, your bank statements help prove payments.

What to do next

If you sometimes use labour on construction jobs:

1. Register now - Do not wait until you need to pay someone. Being registered costs nothing and means you are ready.
2. Set up online access - Add CIS to your business tax account so you can verify subcontractors and file returns online.
3. Tell your regular helpers - If you have people you use occasionally, let them know about CIS so they understand why you are deducting tax.
4. Keep it simple - A notebook or spreadsheet tracking who you paid, when, and how much deducted is enough for occasional users.

Related guides

• Register as a CIS contractor - detailed registration process
• Verify a subcontractor's CIS status - how to verify subcontractors
• Calculate CIS deductions - how to work out the correct deduction
• Submit your CIS monthly return - step-by-step filing guide
• Register as a CIS subcontractor - if you also work for other contractors