CIS Subcontractor – tax explained

Who is a CIS subcontractor?

If you’re self-employed and agree to do construction work for a contractor, you’re a CIS subcontractor. You should register with CIS.

We deal with CIS tax refunds immediately for a fixed fee of £130 

Contact us or register on our website right away. 

1. Register with CIS

You should register as a subcontractor with the Construction Industry Scheme (CIS) if you’re self-employed or have your own company and are working for a contractor in the construction industry.

CIS is administered by HM Revenue & Customs (HMRC). It regulates payments from contractors to subcontractors in the building industry.

How to register

To register as a subcontractor, call the CIS helpline. You’ll need:

  • the name you want to register with  (eg your name, business name)
  • the unique taxpayer reference number (UTR)  for your business
  • a National Insurance  Number

If you don’t have a UTR, register for Self Assessment before you register with the CIS.

CIS helpline
Telephone: 0300 200 3210
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm

Your contractor will make CIS deductions from the payments they make to you. These count towards your tax and National Insurance payments when you fill in your Self Assessment tax return. In most cases this will result in a tax refund for you at the end of the tax year.

Once you’ve registered with the CIS, you can apply for gross payment status if your business passes some tests. This is where you get your full payment without any deductions.

You must still register with CIS if you’re based abroad but do construction work in the UK – the registration process is different though.

Sole traders and partners in a partnership

Your contractor will make CIS deductions from their payments to you after taking off the cost of any materials you supplied.

The CIS deductions will count towards your tax and National Insurance bill when you fill in your Tax Return and will normally result in a tax repayment due to you.

2. How to get gross payment status

When you’ve registered with the Construction Industry Scheme (CIS), you can apply for gross payment status if your business passes some tests.

This means your contractor pays your full payments. You take care of your own tax and National Insurance instead of having deductions made from your payments by your contractor.

To qualify, you must show HM Revenue and Customs (HMRC) that your business passes 3 tests.

Business test

You’ll need to show that your business:

  • does construction work (or provides labour for it) in the UK
  • is run through a bank account

Turnover test

HMRC will look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least:

  • £30,000 if you’re a sole trader
  • £30,000 for each partner in a partnership, or at least £200,000 for the whole partnership
  • £30,000 for each director of a company, or at least £200,000 for the whole company

If your company’s controlled by 5 people or fewer, you must have an annual turnover of £30,000 for each of them.

Compliance test

You must have kept up to date with your tax and National Insurance in the past. You’re allowed a few lapses – full details are on the HMRC website.

Once you’re registered you must declare your payments in your Ta Return at the end of the tax year.

Apply by calling the CIS helpline:

CIS helpline
Telephone: 0300 200 3210
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm

Keeping your gross payment status

Make sure you’re not late with your tax returns and CIS payments – you could lose gross payment status otherwise.

HMRC checks on this once a year with a review called a Tax Treatment Qualification Test (TTQT).

If you fail the review, you’ll get a letter explaining why you may lose your status and what to do next. You’ll have 30 days from the date of the letter to appeal.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation.

Got a question?
No problem, click here to contact us.