The Construction Industry Scheme (CIS) largely applies to contractors and subcontractors involved in mainstream construction work. In some cases businesses that have a high annual spend on construction, without this being their core business may also fall under the scheme as contractors.
We take on the role of the contractor in so far as we carries out all of the administrative tasks associated with your assignment and status. You (the subcontractor/worker) will find your own assignments and negotiate your rates. We then deduct the relevant amount of Construction Industry Scheme tax at source (you must register as a subcontractor with HMRC to obtain your CIS status), you will be responsible for making your own National Insurance payments.
If you work as a subcontractor and want to do this under the CIS you must register with HM Revenue & Customs before you start working.
Once you have registered for CIS status HMRC will send you your UTR (Unique Tax Reference) number. This will identify you on their systems and enable us to pay you deducting only 20% CIS tax. The UTR is a unique set of 10 digits.
If you do not register before starting work legally we have to make a higher CIS tax deduction from your payments of 30%.
Once you are registered for CIS status tax deductions are 20%. If you were not fully registered before starting work you may be able to claim the difference in CIS tax back (for the period you paid 30%) via your end of year tax return.
Please note: If you register with the CIS Umbrella PAYE service the 20% CIS tax does not apply, you will be taxed in the standard Pay As You Earn method (meaning full tax and National Insurance are deducted from your income at source).
What is a CIS card?
CIS cards used to be issued to contractors and subcontractors in the construction industry. This was replaced by the much simpler unique taxpayer reference (UTR) number in 2007.