Journey
CIS essentials for small builders
The 5 things you need to know about CIS if you use subcontractors. A 5-minute guide for builders, plumbers, electricians and other trades. No jargon, just the essentials.
Does CIS apply to you?
Yes, if you pay anyone for construction work.
CIS is the Construction Industry Scheme. It is a tax system where you deduct tax from payments to subcontractors and send it to HMRC.
It applies if you:
- Pay another person or company for building work
- Are a sole trader, partnership, or limited company
- Work in construction, plumbing, electrical, roofing, or any building trade
Even if you use a subcontractor just once a year, CIS applies to that payment.
Your role under CIS
There are two roles in CIS:
| If you... | You are a... | You must... |
|---|---|---|
| Pay others for construction work | Contractor | Register, verify, deduct, and report |
| Get paid for construction work | Subcontractor | Register to reduce your deduction rate |
Many builders are both. You are a contractor when you pay your labourer. You are a subcontractor when a main contractor pays you.
The 5 steps - your CIS checklist
Get these 5 things right and you will stay compliant.
-
Register as a contractor (once)
Before your first payment to a subcontractor, register with HMRC. This takes 10 minutes online and you only do it once.
CIS for small builders guide
Complete guide with worked examples and common mistakes. Includes registration details and step-by-step instructions.
gov.uk
Register as a CIS contractor with HMRC (opens in a new tab)
The online registration service. You will need your Government Gateway account.
-
Verify each subcontractor (before you pay them)
Before paying any new subcontractor, check them with HMRC. This tells you how much tax to deduct.
You need their:
- Name (exactly as registered with HMRC)
- Unique Taxpayer Reference (UTR) - ask them for this
- National Insurance number (for individuals)
Verify a subcontractor's CIS status
How to verify online, what the results mean, and what to do if verification fails.
-
Deduct tax from the labour cost (when you pay)
Work out the deduction when you pay your subcontractor:
- Start with the invoice total (before VAT)
- Take off any materials the subcontractor paid for
- Apply the deduction rate (usually 20%) to what is left
Quick example
Subcontractor invoice: 1,000 GBP labour + 300 GBP materials = 1,300 GBP total
- Deduction: 1,000 GBP x 20% = 200 GBP
- Pay subcontractor: 1,000 - 200 + 300 = 1,100 GBP
- Pay HMRC: 200 GBP
Remember: Only deduct from labour. Materials pass straight through.
-
Give a statement (within 14 days of the tax month end)
For each tax month in which you paid a subcontractor under deduction, give them a written statement within 14 days of the end of that tax month (so by the 19th), showing:
- Your business name and PAYE reference
- Their name and UTR
- Gross amount, materials cost, and deduction amount
They need this to claim back tax from HMRC.
-
File your return and pay HMRC (by the 19th)
Each month, report all subcontractor payments to HMRC and pay over the deductions.
Submit your CIS monthly return
Step-by-step guide to filing your CIS300 return online, including nil returns if you made no payments.
CIS online service (opens in a new tab)
Verify subcontractors, file returns, and pay deductions - all in one place.
What if you miss a deadline?
Need more detail?
This journey covers the essentials. For worked examples, common mistakes, and troubleshooting, see the full guide.
CIS for small builders - full guide
Detailed guidance with real-life scenarios, common mistakes to avoid, and step-by-step worked examples.
HMRC helpline
If you are stuck, call the CIS helpline: 0300 200 3210 (Monday to Friday, 8am to 6pm).