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Tax - Construction Industry Scheme for Contractors

CIS For Contractors (Employers)

CIS Contractor helpful information …

If you or your business operates as a contractor under the Construction Industry Scheme (CIS), you need to make deductions from any relevant payments you make to CIS subcontractors.

This is usually 20% of gross pay, excluding the costs of materials and VAT. All the deductions you make from subcontractors pay must be paid directly to HMRC every quarter.

  1. You should make these payments in the same way as you pay PAYE and Class 1 National Insurance for your existing employees
  2. You must also provide a monthly return to HMRC with details of all the payments you have made to CIS subcontractors
  3. You must also keep full records of these payments, including any deductions and VAT

The easiest way to make your monthly return is through the HMRC website. To do this you need to register with the CIS online service. However, you may prefer to use Electronic Data Interchange (EDI) software, or you can file paper returns. Details of these methods are available from HMRC.

  1. Your CIS payment returns must reach HMRC within two weeks of the end of each tax month
  2. There is currently a £100 penalty for late returns
  3. If you are a registered CIS contractor, you need to make a CIS return every month
  4. If you have not made any CIS payments to subcontractors that month, you should still provide a ‘nil return’ to say you have made no payments
  5. If you have underpaid or overpaid a subcontractor, you may be able to pay them more or less next time, in which case you do not need to inform HMRC. However, you must always state on your return the amount you have paid out

You should always check your figures carefully, but if you find that you have made an error recording figures on your CIS return, you should inform HMRC as soon as possible.

For More Information See ...

To register for the CIS online service as a contractor:

  1. go to: https://online.hmrc.gov.uk/login
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