CIS Explained – Contractors & Subcontractors

The Construction Industry Scheme (CIS) applies to most construction work carried out in the UK.

It affects how contractors pay subcontractors and how tax is deducted and reported to HMRC. CIS can feel confusing, especially when roles overlap or businesses operate through limited companies.

The Construction Industry Scheme (CIS) applies to most construction work carried out in the UK.

It affects how contractors pay subcontractors and how tax is deducted and reported to HMRC. CIS can feel confusing, especially when roles overlap or businesses operate through limited companies.

What Is CIS?

Under CIS, contractors deduct tax from payments made to subcontractors and report these deductions to HMRC.

Subcontractors then account for this tax through their Self Assessment return and may be able to reclaim overpaid amounts.

Contractors and Subcontractors – What’s the Difference?

  • Contractors are responsible for registering for CIS, verifying subcontractors and submitting monthly returns.
  • Subcontractors have deductions taken from their payments and report income through Self Assessment.

Understanding which role applies to you is essential.

CIS and Limited Companies

CIS still applies where work is carried out through a limited company. This often causes confusion around deductions, payroll and tax reporting.

Getting this wrong can lead to delays or HMRC queries.

Common CIS Issues

  • Not registering correctly
  • Incorrect deductions
  • Missed monthly returns
  • Confusion between contractor and subcontractor responsibilities

How We Can Help

We support contractors and subcontractors with CIS registration, monthly returns, verification and HMRC queries.

Learn more about our Construction and Trades accounting services by contacting us.