Free Guide To The CIS Scheme
Understanding the CIS (Construction Industry Scheme) can be confusing, especially if you're unsure about how deductions, tax obligations, and compliance work. To help you navigate the CIS scheme, we've compiled a list of frequently asked questions covering everything from CIS deductions to filing tax returns.
​
Want to make the process even easier? Download our Free Guide to the CIS Scheme and ensure you're fully informed and compliant!​​
CIS Scheme FAQ
What Is The Construction Industry Scheme (CIS)?
Q
A
The Construction Industry Scheme (CIS) is a tax reduction system set up by HMRC to regulate tax payments in the construction industry. Under CIS, contractors deduct money from a subcontractor's payments and pass it to HMRC as an advance payment towards their tax and National Insurance.
Q
Who Needs to Register for CIS?
A
The Construction Industry Scheme (CIS) applies to businesses and individuals working in the construction sector in the UK. You need to register for CIS if you are:
​
1. A Contractor - You must register if you:
-
Hire subcontractors to complete construction work.
-
Spend more than £3 million on construction work in a 12-month period, even iff construction is not your main business. (e.g., property developers, housing associations.)
​
2. A Subcontractor - You should register if you:
-
Carry out construction work for a contractor and are self-employed, a partnership, or a limited company.
-
Want to receive a lower tax deduction (20%) instead of the standard 30% deduction for unregistered subcontractors.
Q
What Are The Benefits of Registering for CIS?
A
Registering for the Construction Industry Scheme (CIS) offers several advantages, especially for subcontractors who want to avoid higher tax deductions. Key benefits include:
​
-
Lower Tax Deductions
-
​Faster & Easier Tax Refunds
-
Compliance & Avoiding Penalties
-
Improved Business Opportunities
Q
How Much Tax is Deducted Under CIS?
A
Under CIS, tax deductions are made from a subcontractor's payments before they receive them. The deduction rate depends on the subcontractor's CIS registration status.
​
1. Registered Subcontractors - 20% Deduction
If you are registered for cis, 20% of your earnings (excluding VAT and materials) will be deducted by the contractor and sent to HMRC as an advance tax payment.
​
2. Unregistered Subcontractors - 30% Deduction
If you are not registered for CIS, contractors must deduct 30% from your payments instead of 20%.
Q
How Do I Claim A CIS Tax Refund?
You can claim a CIS tax refund by following these steps:
​
1. Gather Your CIS Records
To claim your refund, you will need:
-
CIS deduction statements (provided by contractors).
-
Payslips and invoices showing payments received.
-
Business expenses receipts (tools, travel, materials, etc.).
​
2. Submit a Self-Assessment Tax Return
-
CIS refunds are processed through your Self-Assessment tax return.
​
3. Calculate Your Overpaid Tax
-
HMRC will check if you've paid more tax than you owe based on your income, expenses, and CIS deductions. If you've overpaid, you'll be entitled to a refund.
​
4. Receive Your Refund
-
Once HMRC processes your tax return, any overpaid tax will be refunded. Refunds are usually paid within 2-8 weeks.
A
Q
When Is The Deadline for CIS Returns?
A
If you are a CIS contractor, you must submit a CIS return to HMRC every month to report payments made to subcontractors.
​
Key CIS Return Deadlines:
-
Due Date: The CIS return must be submitted by the 19th of each month for payments made in the previous tax month.
-
Tax Month: Runs from the 6th of one month to the 5th of the next.
-
Example: If you make payments to subcontractors in April, you must submit your CIS return by 19th May.