- 0191 447 9119
- office@lscaccounting.co.uk
Updated October 2026
The Construction Industry Scheme (CIS) is a system where contractors deduct money from payments made to subcontractors and pass it to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.
For CIS, you count as a contractor if you either:
If you work for a contractor and carry out construction work, but you are not their employee, you may count as a subcontractor. You do not have to register for CIS, but if you are not registered, contractors will normally deduct 30% rather than the standard 20%.
Some types of work are not covered by CIS, so no deductions will be made from payments for those activities. You can find more information about what work is and is not included in the scheme on the HMRC website.
You may also be able to apply for gross payment status, which means contractors can pay you without making CIS deductions. To qualify, you must meet HMRC’s conditions, including tests relating to your tax record, the type of work you do, your bank account and your turnover.
Registering for CIS is straightforward if you are a sole trader. You can register online through GOV.UK, and you will need information such as your Unique Taxpayer Reference, National Insurance number and other business details. GOV.UK
Partnerships and limited companies can also register, with separate HMRC registration routes available depending on the type of business. Partnerships can use the CIS304 process, while limited companies have their own CIS registration route.
Although the contractor makes CIS deductions from your payments and pays them to HMRC, it is still your responsibility to make sure the correct amount of tax and National Insurance is paid.
If deductions are made, your contractor must give you a payment and deduction statement showing what you have been paid and how much has been deducted. This must normally be provided within 14 days of the end of the relevant tax month. Keep these statements, as you will need them when reporting your tax or claiming back deductions. GOV.UK
If you are a sole trader or partner, you report your CIS deductions through your Self Assessment tax return. The deductions are treated as advance payments towards your tax bill. GOV.UK
If you are a limited company with gross payment status, you report your income through your Corporation Tax return as normal. If CIS deductions have been taken, these are generally claimed through the company’s payroll process rather than through the Corporation Tax return. HMRC advises against trying to claim CIS deductions through the Corporation Tax return, as this can lead to penalties.
If you’re at all unsure about any aspect of the financial side of the Construction Industry Scheme then you should seek the expertise of an accountant.
LSC Accounting Ltd. is an expert in the area of CIS, with many years of experience and hundreds of happy customers. We provide a friendly, efficient and cost-effective approach to accountancy. To discuss your requirements, you can either contact us through our website or call 0191 447 9119.
Book a free call and get a fixed-fee plan for your company accounts.
