What Is the CIS Scheme? Overview of Construction Industry Scheme

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The Construction Industry Scheme outlines how contractors pay subcontractors.

Understanding CIS

CIS doesn’t apply to employed staff. Determining whether construction workers are subcontractors or employees is challenging.

Key Points about CIS

  • If you pay subcontractors for work, or spend over £1 million a year on it, you’re a contractor under CIS.
  • There are two CIS components: being a ‘contractor’ or a ‘subcontractor’.
  • Registering for CIS means 20% of gross pay is deducted, not 30%.
  • CIS helps tackle evasion by contractors paying subcontractors’ tax owed, not subcontractors paying it through their tax return.
  • Contractors must determine if subcontractors are self-employed or employed by them.
  • CIS helps spread the tax burden over the year with monthly payments. Contractors submit monthly returns on subcontractor payments.

CIS Scope

CIS covers work on structures, buildings, roads, bridges, foundations, demolition, repairs, alterations, decorating, installing power, heating or ventilation. Exceptions are scaffolding and architecture.

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