Un Ultimate to Construction Industry Scheme Tax in the UK

If you are a construction company, you may be wondering about the CIS tax in the UK. Here you will find out the different categories of CIS tax, who is liable for it, and how to pay. To get started, you can read our article on Who Must Pay CIS Tax. Alternatively, you can also read our article on CIS tax rates in the UK. The construction industry scheme tax is a government-run scheme for construction companies and it must be paid by those involved in a construction project.


What Is the Construction Industry Scheme?

When calculating your Construction Industry Scheme (CIS) tax, you should record gross payments to subcontractors, deductions, and the cost of materials invoiced by your subcontractor. If you can’t make these deductions, you should consider seeking insolvency advice from a licensed insolvency practitioner. A licensed insolvency practitioner can help assess your company’s financial status and risk of entering insolvency. If you’re a contractor and need help managing your debts, consider using a firm like Real Business Rescue.

To qualify, you need to be a ‘close company’, which means that your business has fewer than 5 shareholders. The term ‘close company’ covers the vast majority of private UK companies. You’ll not have to pay tax on everyday travel to your workplace, but you may be able to deduct certain travel expenses if you move offices or visit customers on a temporary basis. Another example of taxable benefits is a company car. The amount of this benefit is calculated according to special rules.


Who Is CIS Tax For?

If you’re a sole trader or self-employed contractor working in the construction industry, you may be eligible to receive a tax refund. In some cases, the contractor will issue documents similar to a payslip. However, you should be aware that self-employed contractors are not considered employees and do not have employment rights. In addition to building work, CIS applies to site clearing, repairs, decorating, and power systems.

First, you must choose the classification type of the entity you’re working with. If it’s a partnership, you’ll need to enter the Unique Taxpayer Reference (UTR). This is derived from the Certificate Number and Reference Number on CIS vouchers. If you’re a company, the UTR is the first 10 digits of the Company Registration Number. This number is required to file corporate financial statements.


What Are the CIS Tax Rates in the UK?

CIS is a special tax regime for construction industry sub-contractors. It applies to businesses spending more than PS1 million over a three-year period for construction work. This scheme is intended for self-employed sub-contractors, who meet certain requirements such as registering with the HMRC and passing three tests. They must also carry out construction work in the UK and run their operations through a UK bank account.

A self-employed sole trader can claim a CIS refund if the business has incurred expenses and overpaid tax. However, it is important to note that CIS refunds may not be fully refundable because National Insurance deductions are applied to any amounts that are paid as expenses. As a result, Lee has incurred a higher amount of tax and NIC than the total amount of his self-employed business income.


How to Pay CIS Tax?

To join the Construction Industry Scheme, contractors must register with HMRC. This involves setting up an accounts office and a PAYE employer reference. The deductions are paid monthly or quarterly. Contractors can choose to enroll as a separate business or as a manager PAYE. The deadline for submitting a return is 14 days after the end of the tax month. If you are a freelance builder, you must also check if your company is eligible for the scheme.

The Construction Industry Scheme (CIS) is a government scheme that provides tax rules for the construction trade. Among other things, the scheme deals with workers’ compensation rates. Each month, it sets deduction rates for the tax on workers’ compensation. Additionally, the scheme deducts cash from subcontractors’ pay for income tax and National Insurance Contributions. Typically, these deductions are made directly to HM Revenue and Customs.


CIS Registration can be Challenging

A CIS registration can be challenging. There are three main ways to comply with the CIS. The first way is to identify the status of your subcontractors. If your contractor uses CIS registration online, you may be able to register your subcontractors as CIS contractors. In case you do not have a UTR number, you must register as another business, file a self-evaluation, and request to change your status from contractor to subcontractor.

To avoid the CIS, contractors must check that the subcontractors they hire are registered with HMRC. They will need a Unique Taxpayer Reference (UTR) or National Insurance number (NIR) number to complete this task. If a subcontractor is not registered with HMRC, the contractor must make deductions of 20% from their subcontractor’s pay. These amounts are then paid to HMRC as advance payments.

Getting Help from a Tax Accountant

If you are a construction industry worker in the UK, you may be required to pay Construction Industry Scheme tax. This tax is a deduction that contractors must make from payments made to subcontractors, and then pass on to HMRC. You should register with HMRC when you start work in the construction industry, whether you pay your subcontractors on a gross or PAYE basis.

Firstly, the construction industry scheme is a special tax regime for contractors. As a contractor, you are entitled to deductions for work that you carry out. HM Revenue and Customs will calculate the total amount of tax you owe, and deduct any deductions you claim. You should pay your tax by the 31 January following the end of your tax year. However, you should not underestimate the importance of checking your self billing invoices to ensure that you have not overlooked anything.



The Construction Industry Scheme can be very complicated and is an additional administrative burden. You may be wondering how to register for the scheme, and you may be unaware of the requirements. In addition, this tax scheme may also make you eligible for Self Employment Income Support Scheme grants. As a result, it is wise to seek help from a Tax Accountant for Construction Industry Scheme tax in the UK.

Construction contractors often do not prioritize understanding tax systems. However, if they use subcontractors, they must comply with the Construction Industry Scheme. The Construction Industry Scheme (CIS) is a government scheme that requires contractors to deduct tax at source from the payments they make to their subcontractors. The aim of the scheme is to reduce fraud in the construction industry by helping subcontractors spread their tax liabilities over a year.


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Nizam is a seasoned home lift expert with over a decade of experience in the industry. He has a comprehensive understanding of home lift technologies, design principles, and installation practices. Throughout his career, he has played a pivotal role in designing, installing, and maintaining home lifts for residential and commercial properties.