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.

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.

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 the end of each tax month in which they pay you, 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.

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.