CIS Tax

Under the CIS tax system, contractors deduct money from payments to subcontractors and pass it to Her Majesty’s Revenue and Customs (HMRC).

The CIS tax deduction counts as an advance payment towards the subcontractor’s taxes and National Insurance.

If you are a registered contractor, you must submit your monthly returns and verify subcontractors.

Who is considered a contractor or subcontractor?

You are a contractor if you meet any of the following conditions:

• you pay subcontractors for construction work
• your company does not carry out construction work, but you have spent over £3 million on construction within 12 months of making the first payment

You are a subcontractor if you carry out construction work for a contractor.

You must register as both a contractor and subcontractor simultaneously if you fall under both categories.

Work covered by CIS.
CIS covers most construction work, such as:

• permanent or temporary construction
• engineering works, such as roads and bridges

Within CIS, construction work includes:

• site preparation – for example, laying foundations and providing access works
• demolition and dismantling
• construction work
• alterations, repairs, and decoration
• installation of heating, lighting, power, water, and ventilation systems
  cleaning the interior of buildings after construction work

Exceptions
You do not need to register if you only perform certain tasks, including:

• architecture and surveying
• scaffolding rental (without labor)
• carpet laying
• manufacture of materials used in construction, including machinery and equipment
  delivery of materials
• work on construction sites that clearly are not construction work – for example, running a canteen or facilities on a construction site

CIS Tax