The Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.
The scheme applies mainly to contractors and subcontractors in mainstream construction work, however businesses or organisations whose core activity isn't construction but have a high annual spend on construction may also count as contractors and fall under the scheme.
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You can check whether CIS applies to your business and whether you count as a contractor, subcontractor (or both) under the scheme by reading the guidance below.
As a contractor you have certain obligations under the scheme, including registering with the scheme, checking whether your subcontractors are registered with HM Revenue & Customs (HMRC), paying subcontractors and submitting monthly returns.
If you are a subcontractor, you need to register with HMRC - as well as your main business name you can register up to one trading name. You must also keep HMRC informed of any changes to your business (including changes to the structure, address, business name, partners etc).
If you're an agent acting for CIS clients you need to be authorised to act for them. You can get authorisation online using HMRC Online Services if you're registered with the PAYE/CIS for Agents service.
If you are a managing agent acting on behalf of a client - find out what your and your client’s responsibilities are under CIS.
If you're a larger contractor business you can choose to operate as a 'multiple contractor' under CIS. A multiple contractor is a contractor that has divided their business up into several sections, known as divisions, specifically for CIS purposes.
Even if construction isn't your main activity, you'll need to register with HMRC as a CIS contractor if you spend more than a certain amount each year on 'construction operations' covered by the scheme. For example this might include public bodies such as local authorities.
You may still need to register with CIS even if your business is based overseas - follow the link to find out more.
If you are a contractor under CIS you need to follow certain rules when you are paying your subcontractors. If you are a subcontractor it's important that you register with HMRC and keep them informed of any changes to your business, to ensure that you are paid the correct amount.
As a contractor under CIS you will need to make monthly returns each month. Doing this online is quick and easy. If you make any mistakes HMRC can help you sort them out.
Whether you work as a contractor or subcontractor under CIS it's important to let HMRC know if there have been any changes to your business since you first registered with them (including address changes, changes to the legal structure of your business, liquidation or business ceasing to trade for any other reason).
Every business is different. If you've got any questions about whether your business is affected by CIS you can call HMRC’s CIS Helpline.