CIS (Construction Industry Scheme)

How CIS Affects Construction Workers

The Construction Industry Scheme (CIS) requires contractors in the construction industry to deduct money from subcontractors’ payments and pass it to HMRC. These deductions count as advance payments of the subcontractor’s tax and NI. The standard deduction rate is 20%, or 30% if the subcontractor is not registered with HMRC.

If you are a registered subcontractor, CIS deductions are offset against your self-assessment tax bill. Many subcontractors end up receiving a refund because CIS deductions exceed their actual tax liability, especially if they have significant business expenses.

Gross payment status allows established subcontractors to receive payments without CIS deductions, but this requires a clean compliance record and meeting turnover tests. Use our CIS calculator to see how deductions affect your income.

How Cis Works in Practice

The Construction Industry Scheme (CIS) requires contractors in the construction industry to deduct money from subcontractors' payments and pass it to HMRC. Registered subcontractors have 20% deducted, while unregistered subcontractors have 30% deducted. These deductions count as advance tax payments and are offset against the subcontractor's total tax liability at year end.

Practical Tips

If you work as a subcontractor in construction, registering with CIS ensures the lower 20% deduction rate. The deductions are not additional tax — they are payments on account of your income tax and NI liability. When you file your self-assessment, CIS deductions are credited against your total tax bill, and you may receive a refund if too much was deducted. Keep all CIS payment statements (CIS vouchers) as evidence. See CIS calculator.

Related Topics

CIS applies to a wide range of construction activities including building, decorating, plumbing, and electrical work. It does not apply to architecture, surveying, or purely professional services within construction.