If you are starting out as a construction subcontractor in the UK, one of the first things you need to sort out is registering for the Construction Industry Scheme. It sounds straightforward, and mostly it is, but there are a few steps to get right before you take on your first job. This guide explains the whole process in plain English, so you know exactly what to do and what to expect.
Quick Answer: How Do You Register for CIS?
You register as a CIS subcontractor by contacting HMRC, either online through your Government Gateway account or by phone on 0300 200 3210. You will need your Unique Taxpayer Reference (UTR) and National Insurance number. Once registered, contractors can verify you with HMRC and deduct tax at the standard 20% rate rather than the higher 30% unverified rate.
What Is the Construction Industry Scheme?
CIS is a tax deduction scheme that applies to construction work in the UK. When you work as a subcontractor, the contractor you work for is required to deduct money from your payments and send it directly to HMRC on your behalf. This covers your Income Tax and National Insurance contributions in advance.
The scheme covers most construction work including groundwork, building, alterations, repairs, decoration, and demolition. It does not normally apply to architecture, surveying, or carpet fitting where no building work is involved.
Do You Have to Register?
You do not have to register for CIS, but if you do not, contractors must deduct tax at 30% from your payments rather than 20%. That 30% rate can have a serious impact on your cash flow, especially in the early months of trading.
Registering takes very little time and costs nothing, so there is really no reason to delay.
What You Need Before You Register
Before you contact HMRC, make sure you have the following to hand:
- Your Unique Taxpayer Reference (UTR). If you do not have one yet, you will need to register for Self Assessment first.
- Your National Insurance number
- Your legal name and trading name if different
- Your business address
- Your business type (sole trader, partnership, or limited company)
If you are registering a limited company for CIS, you will also need the company registration number from Companies House.
How to Register: Step by Step
Step 1: Register for Self Assessment First
If you are a sole trader and have not already registered for Self Assessment, you must do this before you can register for CIS. You register through HMRC’s online portal using your Government Gateway account. HMRC will send your UTR by post within around 10 working days.
Step 2: Register for CIS
Once you have your UTR, you can register as a CIS subcontractor. You can do this:
- Online via your Government Gateway account, under the CIS section
- By phone on 0300 200 3210
There is no separate CIS registration form. HMRC simply notes on their system that you are registered, which allows contractors to verify you as a 20% deduction subcontractor rather than an unverified 30% deduction one.
Step 3: Tell Your Contractors
Once registered, give your UTR to any contractor you work for. They will use it to verify your status with HMRC before making their first payment to you. The verification tells them which deduction rate applies to you.
What Deduction Rate Will You Be On?
There are three possible CIS deduction rates:
- 20% (standard rate): Applies once you are registered with HMRC and verified by the contractor
- 30% (higher rate): Applies if you are not registered, or if the contractor cannot verify you
- 0% (gross payment status): Applies if you have applied for and been granted gross payment status by HMRC
Most subcontractors start on 20% and move to gross payment status once they have a track record of filing their tax returns and paying on time.
What Happens to the Money Deducted?
The deductions are not a final tax bill. They are advance payments towards your Self Assessment tax liability for the year. When you file your tax return, the total CIS deductions are offset against what you owe. If you have had more deducted than your final bill, HMRC will refund the difference.
This is why many subcontractors receive CIS refunds each year, particularly those with legitimate business expenses to claim.
Common Expenses That Reduce Your Tax Bill
As a CIS subcontractor, you can claim allowable expenses against your income, which reduces the profit you are taxed on. Common deductible expenses include:
- Materials you have bought for the job (where not reimbursed by the contractor)
- Tools, equipment, and PPE
- Van or vehicle running costs used for work travel
- Public liability insurance
- Mobile phone costs relating to work
- Accountancy fees
Keeping records of all your expenses throughout the year makes the tax return process much simpler.
What If You Work Through a Limited Company?
If you operate through a limited company, the company itself registers for CIS as a subcontractor rather than you personally. CIS deductions come off the company’s invoices. The company then claims those deductions against its Corporation Tax liability or applies for a refund.
Running a limited company under CIS has both advantages and additional administrative responsibilities, so it is worth taking professional advice before deciding on your trading structure.
Typical Costs for CIS Subcontractors
| Service | Typical Cost (Kent) |
|---|---|
| Self Assessment registration assistance | Free (HMRC) |
| Annual CIS tax return (sole trader) | £150 to £350 |
| CIS refund claim (with expenses review) | £200 to £400 |
| Limited company CIS accounts | £500 to £900 per year |
Frequently Asked Questions
Do I need to register for CIS if I am just doing the occasional subcontracting job?
Yes, if you are being paid by a contractor for construction work, CIS applies regardless of how often you work. Even a single job puts you inside the scheme. Registering ensures you are on the 20% rate rather than 30%.
How long does CIS registration take?
If you already have a UTR and Government Gateway account, CIS registration can be completed in a few minutes online. If you need to register for Self Assessment first, allow up to 10 working days for your UTR to arrive by post.
What if my contractor deducts 30% even though I am registered?
This can happen if the contractor has not yet verified you or if there is a mismatch with your details on HMRC’s system. Contact your contractor and ask them to re-verify your UTR. If the issue persists, contact HMRC directly.
Can I apply for gross payment status straight away?
No. HMRC requires you to have been in the CIS scheme for a period and to have a clean compliance record before granting gross payment status. You need to show that your taxes have been paid on time and your returns filed correctly for the previous 12 months at minimum.
What records do I need to keep for CIS?
You need to keep all payment statements issued by contractors (CIS deduction statements), invoices you have raised, receipts for materials and expenses, and bank statements. Keep these for at least five years after the relevant tax year.
Do CIS deductions count towards my state pension?
CIS deductions cover Income Tax but not National Insurance directly. As a self-employed subcontractor, you pay Class 2 and Class 4 NI through your Self Assessment return. Class 2 NI contributes to your state pension entitlement.
Ready to Get Your CIS Sorted?
Registering for CIS is the easy part. Making sure you are claiming every allowable expense and getting the full refund you are owed is where a specialist tax accountant earns their fee. We work with CIS subcontractors across Kent, helping them with registration, annual tax returns, and refund claims.
Our principal tax adviser is ACCA qualified, ATT qualified, and an HMRC Registered Tax Agent with over 25 years of experience. Our clients across Gravesend, Dartford, Medway, Maidstone, Tonbridge, and Sevenoaks trust us to keep them compliant and make sure they are not overpaying tax. Get in touch today for a straightforward conversation about your CIS tax position.
Also see: CIS Tax Refund in Gravesend | CIS Tax Refund in Dartford | CIS Tax Refund in Medway
