If you work in the trade or construction industry, you’ll have likely heard of the Construction Industry Scheme (CIS). But what is it, what does it mean for you, and how do you get started?
Whether you own a fully-fledged construction firm or are dipping your toe into subcontracting, you must register for CIS to stay compliant with HMRC and meet your tax obligations.
The expert accountants at Ascott Blake are here to answer your questions, clear up any confusion, and guide you through the CIS registration process step-by-step. Keep reading to stay compliant.
Who needs to register for CIS?
If you’re involved in construction work in the UK (whether a self-employed subcontractor or a limited company construction firm), chances are CIS will apply to you. But whether you need to register for CIS or not all depends on your role.
Here’s who the CIS scheme applies to:
- Contractors and businesses who pay subcontractors for construction work
- Subcontractors who partake in construction work for contractors
CIS covers a wide range of activities, including building, decorating, repairs, plumbing, and so on. If you’re in the trade industry and don’t know where CIS fits into your daily operations, a specialist accountant for tradespeople can help.
Why do you need to register for CIS?
The Construction Industry Scheme (CIS) is HMRC’s preferred way for contractors to pay subcontractors. It’s designed to simplify subcontractors’ tax payments by enabling contractors to deduct Income Tax and National Insurance directly from their pay.
Registering for CIS as a subcontractor helps you save money by avoiding higher tax deductions. CIS-registered subcontractors are currently taxed at 20%, as opposed to unregistered subcontractors, who are taxed at 30% (2024/25).
Most importantly, for both contractors and subcontractors, registering for CIS keeps you compliant with HMRC. It ensures the right amount of tax is paid and prevents you from receiving any fines for operating outside of CIS regulations. It also makes it easier to manage your taxes by simplifying your end-of-year Self-Assessment or Corporation Tax returns.
What happens if you are not CIS-registered?
Aside from the increased risk of non-compliance penalties, subcontractors face the biggest impact of not registering for the Construction Industry Scheme. Unregistered subcontractors get taxed more, impacting their finances and tax-saving potential.
Five steps to register for CIS
Follow these simple steps to register for CIS as a subcontractor or contractor.
1) Decide how you want to register
The first step is to establish how you’ll register for the Construction Industry Scheme. Are you a sole trader subcontractor, a limited company construction firm, or another type of business spending millions on construction work?
Subcontractors will obviously register for CIS as subcontractors, while construction firms, large businesses, and contractors who hire subcontractors will register for CIS as contractors.
Registering as a contractor is a little different, as you’ll first have to register as an employer and wait for further information from HMRC.
2) Gather essential information
Before registering as a subcontractor, it’s best to gather any documents you might need, such as your Unique Tax Reference number, legal business name, Government Gateway user ID, VAT number (if you’re registered for VAT), and possibly your National Insurance number.
Not only will keeping neat and tidy records help you register for CIS, but it will also make future interactions with HMRC much simpler.
3) Log into your HMRC Government Gateway Account
Log onto your account using your Government Gateway user ID. If you don’t have an account, you can create one on the Gov website.
4) Complete the registration process
Once you’ve got your Government Gateway user ID and password, log in and head to the CIS registration page. From here, you can follow the rest of the registration process online and choose whether you want to apply for gross payment status or stick to the standard net payment status.
Remember to go through your details with a fine-tooth comb. An error in your UTR or National Insurance number can cause unwanted delays.
5) Await confirmation
After you’ve submitted your application, HMRC will review your details. If everything checks out, you’ll receive confirmation of your registration and CIS payment status.
Need help with CIS? Get in touch with Ascott Blake
If you’re really struggling, that’s what we’re here for! Speaking to an expert like one of the CIS accountants at Ascott Blake will help you glide through the registration process and keep you compliant far beyond it.
Get in touch today by calling 01279 797 222 or filling out our enquiry form, and we’ll get back to you for a friendly chat.
Frequently asked questions about CIS registration
How long does it take to register for CIS?
The time it takes to register for CIS varies from person to person, depending on how you register and whether any further information is required. It might also take longer if HMRC is experiencing a particularly busy period.
You should register as soon as possible to avoid delays and use the CIS helpline if you do run into any issues.
Do I still need to complete a Self-Assessment tax return if I am CIS registered?
Yes. Even though contractors can directly handle a subcontractor’s tax and National Insurance deductions, subcontractors still need to file a Self-Assessment tax return to account for their income and expenses. This is how subcontractors can claim expenses and tax reliefs and work out if they’re due a tax refund.
What is gross payment status?
Gross payment status means subcontractors are in control of their own tax and NICs. To apply for gross payment status, you have to prove to HMRC that you are a trustworthy taxpayer and meet specific criteria. You can apply online or by post.
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