The Construction Industry Scheme (CIS) is a system for taxing workers in the construction industry. Here are some key points about this scheme:
- Subcontractor workers normally have 20% tax deducted from their income
- The definitions of ‘contractor’ and ‘construction industry’ are complex, but you should expect to fall under this scheme for almost all building work you do for anyone other than a private homeowner
- Subcontractors in construction need to register under CIS, as well as being registered as self-employed
To register under CIS you must first be registered as self-employed, you have to register for both separately. You can register as self-employed online here. Once you are registered as self-employed you should call the CIS helpline below to register as CIS.
HMRC have a specialist CIS helpline that you can contact here: 0300 200 3210
There is more information about CIS at https://www.gov.uk/business-tax/construction-industry-scheme
Will I be employed or self-employed?
Contractors have an obligation to decide if their workers are employed or self-employed. Each contract must be evaluated on its own. Therefore, a worker may be self-employed in one contract and employed in the next contract. Registering as CIS doesn’t mean that you will automatically be self-employed for all your work in the construction industry. If you have any doubts about your employment status, you should contact HMRC or take professional advice. It is particularly important to take independent advice if you are offered work via an Umbrella Company, as a member of a partnership, or via an agency.
If you are CIS Subcontractor you may find that your tax is managed by an ‘Umbrella Company’. If you work under an umbrella company, they will usually employ you and manage your tax obligation on your behalf, whilst you undertake work for one of their clients. You can read more about working through an umbrella company here on Gov.uk
