Guide

Register as a CIS contractor

How to register as a contractor under the Construction Industry Scheme (CIS). This guide explains who must register, the registration process, and your ongoing obligations once registered. Essential for anyone paying subcontractors for construction work or spending over 3 million GBP on construction operations.

Construction & Property UK-wide

If you pay subcontractors for construction work, you must register as a CIS contractor with HMRC before making your first payment. This applies whether you are a construction business or a business in another industry that commissions significant construction work.

Once registered, you must verify subcontractors, make tax deductions from their payments, and file monthly returns to HMRC. Failure to register and operate CIS correctly can result in penalties and having to pay the tax yourself.

Who must register as a CIS contractor

You must register if either of the following applies:

  • You pay subcontractors for construction work - this applies regardless of your industry or how often you use subcontractors
  • You are a deemed contractor - your business spends over a set threshold on construction operations

Construction operations include building, repairs, decorating, demolition, civil engineering, and installing systems like heating or electrics.

Deemed contractor threshold

Businesses whose main activity is not construction can still be caught by CIS rules. If your construction expenditure exceeds the threshold, you become a 'deemed contractor' and must register:

How to register as a CIS contractor

Registration is done through the employer registration process with HMRC. The following snippet explains the full process:

Deduction rates you will apply

Once registered, you must verify each subcontractor before first payment and apply the correct deduction rate. The rate depends on the subcontractor's registration status:

Filing and payment deadlines

As a CIS contractor, you must file monthly returns and pay deductions to HMRC on time. Missing deadlines results in automatic penalties:

What happens after registration

Once registered as a CIS contractor, you have ongoing legal obligations:

Verify every subcontractor

Before making the first payment to any subcontractor, you must verify them using the CIS online service. HMRC will tell you what deduction rate to apply. You must re-verify if you have not included a subcontractor on a return in the current or last two tax years.

Make deductions and provide statements

Calculate deductions on the labour element of each payment (excluding VAT and materials). Within 14 days of each tax month end, give the subcontractor a payment and deduction statement showing what you paid and what you deducted.

File monthly returns

File a CIS return by the 19th of each month, even if you made no payments to subcontractors that month. If you expect no payments for a period, you can request inactivity for up to 6 months.

Pay deductions to HMRC

Pay the deductions you have made to HMRC. If you also run PAYE for employees, CIS deductions are paid together with PAYE and National Insurance.

Keep records

Keep CIS records for at least 3 years after the end of the tax year they relate to. HMRC can fine you up to 3,000 GBP if you cannot produce records when asked.

Penalties for non-compliance

HMRC takes CIS compliance seriously. Penalties include:

  • Late returns: 100 GBP for 1 day late, 200 GBP at 2 months, then higher amounts at 6 and 12 months
  • Wrong employment status: Up to 3,000 GBP for declaring someone as a subcontractor when they should be an employee
  • Missing records: Up to 3,000 GBP if you cannot show CIS records when asked

If you make deductions but do not pay them to HMRC, you may have to pay the tax yourself plus interest and penalties.

Next steps

After registering as a CIS contractor:

  1. Set up your systems - configure payroll or accounting software to handle CIS verification, deductions, and returns
  2. Verify your first subcontractor - use the CIS online service before making any payment
  3. Understand the VAT reverse charge - most construction services between CIS-registered businesses are subject to the VAT domestic reverse charge
  4. Consider your subcontractors' status - ensure they are genuinely self-employed and not employees

Register as an employer with HMRC

Related guides

  • Verify a subcontractor's CIS status - how to verify subcontractors before payment
  • Submit your CIS monthly return - step-by-step guide to filing CIS300 returns
  • VAT reverse charge for construction - when to apply the reverse charge on construction services
  • Calculate CIS deductions - how to work out the correct deduction amount

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