Register as a CIS subcontractor

If you work as a subcontractor in the construction industry, contractors must deduct tax from your payments and pay it to HMRC on your behalf. This is called the Construction Industry Scheme (CIS).

The amount deducted depends on whether you are registered with HMRC:

Registered: 20% deducted from the labour element of your payments
Not registered: 30% deducted from your payments

Registration is voluntary, but it significantly improves your cash flow. The deductions count towards your tax bill, so you are not paying extra tax - you are just keeping more of your money until your tax return is due.

Why register?

Registering as a CIS subcontractor reduces your deduction rate from 30% to 20%. On a payment of 1,000 pounds (labour only), this means keeping an extra 100 pounds in your pocket.

CIS deduction rates 2025/26

Construction Industry Scheme deduction rates applied to subcontractor payments. Contractors must deduct tax at source based on the subcontractor's registration status. Rates are set by HMRC and apply UK-wide.

Registered subcontractor rate: 20%
Unregistered subcontractor rate: 30%
Gross payment status rate: 0% (no deductions)
Effective from: Current tax year 2025/26
Deduction basis: Labour element only (excluding VAT and materials)

When to apply each rate:

20% rate - Subcontractor is registered with HMRC for CIS but does not have gross payment status. This is the standard rate for most registered subcontractors.
30% rate - Subcontractor is not registered with HMRC, or their details cannot be verified. Always verify subcontractors before first payment.
0% rate (gross payment) - Subcontractor has been granted gross payment status by HMRC. They receive full payment and account for tax themselves via Self Assessment or Corporation Tax.

Important: Deductions are calculated on the labour element only. Exclude VAT and any materials the subcontractor has directly paid for.

What is the Construction Industry Scheme

CIS contractor - make deductions and pay subcontractors

Who should register

You should register if:

You are self-employed (sole trader, partnership, or limited company)
You carry out construction work for contractors
You want to reduce the tax deducted from your payments

You do not need to register if you only work for customers who are not CIS contractors (for example, private homeowners). However, if you ever plan to work for contractors, registering now avoids delays later.

How to register

Follow these steps to register as a CIS subcontractor with HMRC.

CIS subcontractor registration process

Step-by-step procedure for registering as a subcontractor under the Construction Industry Scheme (CIS). Registration reduces the tax deduction rate from 30% to 20%, improving your cash flow. This procedure applies to sole traders, partnerships, and limited companies doing construction work.

Registering as a CIS subcontractor reduces the tax deducted from your payments from 30% to 20%. You do not have to register, but if you do not, contractors must deduct 30% from your payments instead of 20%.

Prerequisites

You must be self-employed (sole trader, partnership, or limited company)
You must carry out construction work as defined by HMRC
You need a Unique Taxpayer Reference (UTR) - register for Self Assessment first if you do not have one

Step 1: Check the benefits of registration – Understand how registration affects your payments and tax position before you register.
Step 2: Gather the required information – Before you start, collect all the information you will need for your registration. The details must match exactly with HMRC records.
Step 3: Register online (recommended) – The quickest way to register is online using the GOV.UK service. You will need a Government Gateway account.
Step 4: Alternative - register by post – If you cannot register online, you can register by post using the appropriate form for your business type.
Step 5: Receive confirmation – HMRC will confirm your registration and you can start benefiting from the lower deduction rate.
Step 6: Check your registration status – If you want to confirm you are registered, or check what status you have, you can do this online or by phone.

Deduction rate (unregistered): 30%
Deduction rate (registered): 20%
Deduction rate (gross payment status): 0%
Deductions calculated on: Labour element only (excluding VAT and materials)
CIS helpline: 0300 200 3210
Registration requirement: Voluntary, but significantly improves cash flow

What you must do as a CIS subcontractor

Check HMRC processing times

After you register

Once registered, here is what to expect:

Contractors will verify you: Before paying you, contractors must verify your CIS status with HMRC. This tells them to deduct 20% instead of 30%.
You will receive payment statements: Contractors must give you a written statement within 14 days of each payment, showing the gross amount, materials, and tax deducted.
Keep your statements: You need these to claim back any over-deducted tax through your Self Assessment return.
Deductions count towards your tax bill: When you file your Self Assessment return, the CIS deductions are offset against your total tax liability. If you have paid too much, you will get a refund.

Gross payment status - receiving full payment

If you have an established construction business with a good tax compliance record, you may qualify for Gross Payment Status (GPS). This means contractors pay you the full amount with no deductions - you then pay all your tax through your Self Assessment or Corporation Tax return.

GPS is beneficial for larger subcontractors who need better cash flow for materials, wages, and equipment. However, you must set aside money for your tax bills.

CIS Gross Payment Status turnover thresholds

Minimum turnover requirements and three eligibility tests for CIS Gross Payment Status, allowing subcontractors to receive payments without deductions.

Gross Payment Status (GPS) allows CIS-registered subcontractors to receive the full payment for construction work without 20% deductions. To qualify, you must pass all three eligibility tests: the business test, the turnover test, and the compliance test.

Sole trader threshold: At least £30,000 net construction turnover in qualifying 12-month period
Partnership threshold: At least £30,000 per partner in net construction turnover
Company threshold (close company): At least £30,000 per relevant person (director or shareholder with control)
Company threshold (widely held): At least £30,000 total net construction turnover
Turnover calculation: Net turnover excluding VAT and cost of materials
Qualifying period: 12 months ending with application date

The three eligibility tests

1. Business test

You carry on a business in the UK that includes construction operations
You are run mainly through a bank account

2. Turnover test

Your net construction turnover meets the minimum threshold for your business type
Turnover is calculated excluding VAT and the cost of materials you paid for directly
Based on the 12 months before your application

3. Compliance test

Filed all Self Assessment tax returns on time
Filed all CIS monthly returns on time (if you are also a contractor)
Filed all VAT returns on time (from April 2024)
Paid all PAYE, National Insurance, CIS deductions, and VAT on time
Complied with Companies Act requirements (if a company)
Supplied any tax information requested by HMRC

Minor compliance failures allowed

HMRC allows the following minor failures without affecting your GPS eligibility:

Up to 3 late CIS returns (no more than 28 days late each)
Up to 3 late VAT returns (no more than 28 days late each)
Up to 3 late payments of £100 or more (no more than 14 days late each, per tax type)
Any late payment under £100
Self Assessment return up to 28 days late

Maintaining GPS

Once granted, HMRC reviews your Gross Payment Status annually. They can cancel your GPS if you no longer meet the compliance test or other requirements. Continue filing all returns and making all tax payments on time to keep your status.

Apply for CIS gross payment status

If you change business structure

Your CIS registration is linked to your business structure. If you change from sole trader to limited company, or form a partnership, you must register again under the new structure. Your previous registration does not transfer.

Common mistakes to avoid

Not having a UTR: You need a Unique Taxpayer Reference before you can register for CIS. If you are not yet registered for Self Assessment, do this first.
Details not matching HMRC records: When contractors verify you, your details must match exactly with HMRC records. Check your name, UTR, and National Insurance number are correct.
Forgetting to keep payment statements: Without these statements, you cannot prove what CIS deductions were made and may have difficulty claiming them back.
Not registering before starting work: If you start work before registering, your first payments will have 30% deducted. Register before you begin working for contractors.

CONSTRUCTION & PROPERTY Requirement

CIS only applies to work that counts as 'construction operations' under the scheme. This includes:

Building work (new builds, extensions, alterations)
Repairs and decorating
Demolition and dismantling
Civil engineering (roads, bridges, drainage)
Installing heating, lighting, power, water, and ventilation systems

Some work is excluded, including architecture, surveying, and delivering materials without installing them. If you are unsure whether your work is covered, check the HMRC guidance.

SOLE TRADER Requirement

As a sole trader, you register using your personal details:

Your name (as it appears on HMRC records)
Your personal UTR from Self Assessment
Your National Insurance number

If you also work through a limited company, you will need a separate CIS registration for the company.

Comparison to other structures:

Sole traders use their personal UTR and NI number. Limited companies use their company UTR and company registration number.

LIMITED COMPANY Requirement

Limited companies register using company details:

Company name (as registered with Companies House)
Company UTR (from Corporation Tax registration)
Company Registration Number

Directors' personal details are not used for CIS registration. The company is registered as a separate entity.

Important: Limited companies claim back CIS deductions through their payroll (EPS submissions), not through Corporation Tax returns. Claiming through the wrong route can result in penalties.

Comparison to other structures:

Limited companies offset CIS deductions against PAYE liabilities, not Corporation Tax.

PARTNERSHIP Requirement

Partnerships register using:

Partnership name
Partnership UTR
The registering partner's name, personal UTR, and NI number

Only one partner registers on behalf of the partnership, but their personal details must match HMRC records exactly.

Comparison to other structures:

Partnerships use the partnership UTR plus the registering partner's personal details for verification.

Business Context Testing

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Guvnor

Register as a CIS subcontractor

Why register?

Who should register

How to register

After you register

Gross payment status - receiving full payment

If you change business structure

Common mistakes to avoid

CIS applies to construction operations only

Sole trader CIS registration

Comparison to other structures:

Limited company CIS registration

Comparison to other structures:

Partnership CIS registration

Comparison to other structures:

Compliance Assistant

🧪 Business Context Testing

◉ Content Graph

Why register?

Who should register

How to register

After you register

Gross payment status - receiving full payment

If you change business structure

Common mistakes to avoid

CIS applies to construction operations only

Sole trader CIS registration

Comparison to other structures:

Limited company CIS registration

Comparison to other structures:

Partnership CIS registration

Comparison to other structures:

Related guides in Company Registration

Business Context Testing

Content Graph