The Construction Industry Scheme (CIS) is a tax deduction system run by HMRC. It applies to payments made by contractors to subcontractors for construction work in the UK. Under CIS:

• Contractors deduct tax at source from subcontractors’ payments.

• These deductions count as advance payments toward the subcontractor’s Income Tax and National Insurance.

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CIS covers most construction activities, including building, demolition, repairs, decorating, and installing systems like heating or lighting.

 

When to Register: You must register for CIS if:

• You’re a contractor who pays subcontractors for construction work.

• You’re a subcontractor who is paid by a contractor for construction work.

Subcontractors aren’t legally required to register, but if you don’t, you’ll face higher tax deductions (more on that below).

Best time to register: As soon as you start working in construction and expect to be paid by a contractor. Don’t wait until after your first invoice.

 

Why Register for CIS?

Registering as a subcontractor gives you several advantages:

• Lower tax deduction rate:

  • Registered: 20%

  • Not registered: 30%
    That’s a 10% difference straight off your income.

• Easier to claim tax refunds: HMRC tracks your deductions, making it simpler to offset them against your tax bill.

• Professional credibility: Many contractors prefer working with CIS-registered subcontractors.

• Eligibility for Gross Payment Status: If you meet certain criteria, you can apply to receive payments without any deductions (0%).

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 How to Recover Overpaid CIS Tax

If too much tax has been deducted, you can claim it back:

For Sole Traders or Partnerships:

• Include your CIS deductions in your Self Assessment tax return.

• HMRC will offset this against your tax bill or issue a refund if you’ve overpaid.

For Limited Companies:

• CIS deductions can be offset against your PAYE liabilities during the year.

• If you don’t run payroll or still have overpaid tax at year-end, you can:

  • Claim a refund online via your Government Gateway account, or

  • Submit a written claim to HMRC with your company details, UTR, PAYE reference, and deduction statements.

 

Need help navigating CIS tax and getting your deductions right?
Whether you’re just starting out in construction or looking to recover overpaid CIS, I offer tailored support for subcontractors and sole traders. From registration to reclaiming your refund, I’ll guide you step-by-step.

Get in touch today to save time, reduce stress, and keep more of what you earn.