In this section:
- Multiple contractor status for larger businesses under CIS
- CIS where construction isn't your main activity
- Public bodies and organisations under CIS
- How CIS applies to businesses based outside of the UK
Public bodies and organisations under CIS
The Construction Industry Scheme (CIS) is a set of special rules for handling payments made by contractors to subcontractors for construction work. Under the scheme, contractors need to make sure they pay their subcontractors in the correct way. They must also keep certain records and do certain paperwork - including giving statements to some of their subcontractors and making monthly returns to HM Revenue & Customs (HMRC).
We may treat some large organisations, like public bodies, as contractors because they spend a substantial amount on construction work. This means they have to follow the CIS rules for contractors.
This guide explains what organisations like local authorities, government bodies and housing associations need to do if they become contractors under CIS.
On this page:
- Non-construction organisations that become contractors under CIS
- Public bodies and organisations that can be contractors under CIS
- Special CIS rules for public bodies and local authorities as subcontractors
Non-construction organisations that become contractors under CIS
Under CIS a number of organisations are treated as contractors, if they spend more than £1 million a year on 'construction operations'. They are often referred to as 'deemed contractors'. Deemed contractors have to follow most of the normal CIS rules for contractors whenever they pay for construction work that's covered by the scheme.
For example, a local authority might spend a considerable amount of money each year on building work and refurbishment of its housing stock.
When does an organisation become a deemed contractor?
An organisation becomes a deemed contractor under CIS rules if:
- it is of a kind described in legislation, broadly a government department, local authority or similar public body
- it spends an average of £1 million or more a year over a three year period on construction work
- the construction work it spends money on is classed as 'construction operations' that are covered by CIS
Once an organisation becomes a deemed contractor, it'll stay one until it can show HMRC that its spending on construction operations was less than £1 million a year for three years in a row. If we're satisfied that this is the case, we'll deregister it as a deemed contractor.
Find out about deemed contractors under CIS
Read about CIS contractors' obligations
What types of work are covered by CIS?
As a general rule, the scheme covers almost any work done in the UK to a building, structure, civil engineering work or installation. Some examples include:
- site preparation and groundworks
- building work like bricklaying and roofing
- decorating work
- repairs and refurbishment
- demolition
Some types of work may be covered by CIS only if they're done as part of an ongoing construction contract. For example, cleaning services aren't normally treated as construction operations - but they are if they're done specially in preparation for painting and decorating.
To find out more, read our related guide 'Is your work within CIS?'. You'll also find a list of the types of work that are classed as construction operations under CIS in our booklet CIS340 'Construction Industry Scheme - guide for contractors and subcontractors'.
Find out if your type of construction work is covered by CIS
Go to our booklet CIS340 (PDF 583K)
Public bodies and organisations that can be contractors under CIS
CIS rules list the organisations - and types of organisation - that can become deemed contractors under CIS. They include:
- government departments and their agencies
- local authorities
- development corporations
- housing associations
- NHS (National Health Service) trusts
You can see a full list of public and other specified bodies that can become contractors in our internal CIS Manual.
See a list of public and other specified bodies that can be CIS contractors
Local authorities as contractors
The CIS definition of a local authority includes organisations like:
- metropolitan, county, borough and district councils
- parish councils, community councils and local councils
- police and fire authorities
As with most other organisations, we treat them as CIS contractors if they spend enough on construction operations. In practice, this means that most larger local authorities are CIS contractors and have to follow the CIS rules.
Government departments as contractors
All government departments - and their agencies - throughout the UK have to follow the CIS rules for contractors if they spend enough each year on construction operations. In practice, this means that most government departments are CIS contractors.
NHS trusts as contractors
As with government departments, NHS trusts that spend more than a certain amount each year on construction work are deemed contractors under CIS.
Schools as contractors
Payments for construction work by the head teacher or governing body of a maintained school on behalf of the local education authority aren't covered by CIS. So maintained schools don't become deemed contractors no matter how much they spend. Voluntary aided schools aren't treated as CIS contractors either.
We treat private schools in the same way as any other business that can become a deemed contractor. If they spend enough on construction work each year then they have to follow the CIS rules for contractors.
Special CIS rules for public bodies and local authorities as subcontractors
Any business or organisation can be a subcontractor as a well as a contractor under CIS.
We treat local authorities and certain other public bodies as subcontractors when they carry out construction operations for others. They don't have to register as a subcontractor with HMRC, but they're treated as having 'gross payment status'. This means that contractors can pay them for construction work covered by the scheme without making any deductions from their payments.
CIS rules list the organisations that are treated as subcontractors with gross payment status. As well as local authorities, they include:
- the Post Office®
- the Environment Agency
- the BBC
- NHS trusts
- government departments and agencies
- Registered Housing Associations
You can see a full list of the public bodies that are subcontractors in the internal CIS Manual.
Direct labour organisations and privatised bodies
If one of the above bodies sets up its own direct labour organisation or - direct service organisation - to do construction work, then we'll still treat it as having gross payment status if it remains part of the local authority. But if it becomes a separate company, it'll need to register with us as a subcontractor and apply for gross payment status to be able to keep getting gross payments.
Similarly, if any public body is privatised then it'll have to apply for gross payment status to continue being paid gross.
See a list of public bodies that are CIS subcontractors
Read about how subcontractors get paid under CIS
