Construction Industry Tax

The Construction Industry Scheme

The Construction Industry Scheme (or CIS) is a means of taxing self-employed workers in the construction industry.

Contractors and subcontractors must register with HM Revenue and Customs (HMRC)  under the Construction Industry Scheme in addition to being registered for self assessment. Subcontractors are then paid with or without deduction of tax depending on their status with HMRC.

 Contractors – that is anyone paying subcontractors – must:

• Register with HMRC under the CIS scheme (as well as registering the business with HMRC for self assessment)
• Check the status of subcontractors with HMRC
• Make monthly CIS returns to HMRC showing payments to subcontractors
• Deduct tax from subcontractors pay at the rates HMRC says and pay this tax to HMRC

Subcontractors must:

• Register with HMRC under the CIS scheme (as well as registering with HMRC for self assessment)
• Provide their contractor with details of their Unique Tax Reference Number
• Make annual self assessment tax returns on which relief can be claimed for any CIS tax deducted by the contractor

The Construction Scheme is too complex a subject to cover in a short article. Here we aim to highlight a few key issues. If you need detailed advice you should contact HMRC or your accountant.

Guidance from HMRC:

HMRC CIS helpline – 0845 366 7899

HMRC website CIS pages http://www.hmrc.gov.uk/cis/index.htm