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You should register for the Construction Industry Scheme (CIS) if you work for a contractor and you鈥檙e one of the following:

• a sole trader
• the owner of a limited company
• a partner in a partnership or trust

Under CIS, a contractor must deduct 20% from your payments and pass it to HM Revenue and Customs (HMRC). This is called 鈥榥et payment status鈥� (also known as 鈥榩ayment under deduction鈥�).

These deductions count as advance payments towards your tax and National Insurance bill.

If you do not register for the scheme, contractors must deduct 30% from your payments instead.

If you do not want deductions made

If you do not want deductions to be made in advance by contractors, you can apply for 鈥榞ross payment status鈥�. This will also register you for the Construction Industry Scheme (CIS) if you鈥檝e not already registered.

To register for the Construction Industry Scheme (CIS) you鈥檒l need:

• your legal business name - you can also give a trading name if it鈥檚 different to your business name
• the Unique Taxpayer Reference (UTR) for your business
• your VAT registration number (if you鈥檙e VAT registered)听
• the date you started trading

Depending on your circumstances, you may also need to provide your:

• National Insurance number
• Company Registration Number
• Registering partner鈥檚 details 鈥� including UTR and National Insurance number
• Joint Venture Agreement

If you鈥檙e a subcontractor and a CIS contractor (you pay subcontractors to do construction work), you鈥檒l need to register for CIS as both.

Register online

The quickest way to register is online. This will register you for 鈥榥et payment status鈥� (also known as 鈥榩ayment under deduction鈥�).

To use the online service, you need a:

• UTR
• Government Gateway user ID and password

If you do not have a UTR, register as a new business for Self Assessment and choose 鈥榳orking as a subcontractor鈥� when prompted. You鈥檒l be registered for Self Assessment and CIS at the same time.

If you do not have a Government Gateway user ID, you can create one when you use the service.

If you鈥檙e an agent, use the Government Gateway user ID you use to sign in to your agent services account.

Register by post

If you cannot register online, you can send a postal form.

Fill in the form below that applies to you:

• register if you鈥檙e a sole trader
• register if you鈥檙e in a partnership
• register if you鈥檙e a limited company

If you鈥檙e based abroad

You should still register for CIS if you are a subcontractor based abroad but do construction work in the UK.

Sign up for webinars and emails

You can sign up for webinars and emails about CIS.

To be paid correctly by a contractor, make sure you give them the exact same legal business name or trading name you gave when you registered for the Construction Industry Scheme (CIS). You should also give them your Unique Taxpayer Reference (UTR) so they can verify you.

If you do not, this could affect how much you get paid.

Deduction rates

When a contractor pays you under CIS, they鈥檒l normally make deductions at the standard rate of 20%.

Contractors will make deductions at a higher rate of 30% if:

• you are not registered for CIS
• they cannot verify you
• you give the wrong name for your business

Your contractor should give you monthly statements of payments and deductions. Use them to calculate whether you still owe tax and National Insurance to HM Revenue and Customs (HMRC) or are due a refund.

Gross payment status

You can apply for gross payment status when you register for CIS. This means the contractor will not make deductions from your payments and you鈥檒l pay all your tax and National Insurance at the end of the tax year.

What does not count as your pay

Contractors will not make a CIS deduction from amounts you charge on your invoice for:

• VAT
• equipment which is now unusable (鈥榗onsumable stores鈥�)
• plant hired for the job
• manufacturing or prefabricating materials
• materials that you have paid for directly

When you鈥檙e registered with the Construction Industry Scheme (CIS), you鈥檙e still responsible for paying the correct tax and National Insurance for your business, even if deductions have been made by contractors throughout the year.

Contractors will give you a monthly statement of what they鈥檝e paid you and deductions they鈥檝e made to help with your accounting.

Sole traders and partners

At the end of the tax year, send in your Self Assessment tax return as usual. You should record:

• the full amounts on your invoices as income
• any deductions contractors have made in the 鈥�CIS deductions鈥� field

HM Revenue and Customs (HMRC) will work out your tax and National Insurance bill and take off any deductions made by contractors.

If you still owe tax after this, you鈥檒l need to pay it by 31 January following the end of the tax year.

If you鈥檙e due a tax refund, HMRC will pay the money back.

Limited companies

If you have gross payment status, declare all your income in your Corporation Tax return as usual.

If you pay CIS deductions, you must claim these back through your company鈥檚 monthly payroll scheme. Do not try to claim back through your Corporation Tax return - you may get a penalty if you do.

1. Send your monthly Full Payment Submission (FPS) as usual to HMRC.

2. Also send an Employer Payment Summary (EPS). Enter the total CIS deductions for the year to date.

3. HMRC will take your CIS deductions off what you owe in PAYE tax and National Insurance. Pay the balance by the usual date.

If your company鈥檚 PAYE bill for the period is reduced to zero and you still have some CIS deductions you have not been able to claim back, carry these forward to the next month or quarter (in the same tax year). Tell HMRC in the EPS that you have nothing to pay.

If HMRC thinks your claim is wrong

HMRC may ask you to provide evidence for your CIS deductions or to change your claim.

If you do not do this by the deadline they give you, HMRC will correct your claim and you will not be able to make any more claims in that tax year.

You can appeal HMRC鈥檚 decision. They鈥檒l tell you how to do this.

Keep records

Your company must keep a record of amounts claimed back against your monthly or quarterly PAYE bill.

You can use form CIS132 to do this or keep your own records.

If you paid too much in CIS deductions

HMRC will pay back any deductions your company has not been able to claim back from its PAYE bill during the tax year.

If your company goes into administration

If your company goes into administration or you liquidate your company, the person managing it should write to HMRC to ask for CIS deductions to be repaid straight away.

If you do not have all your CIS statements

If you have not received all the CIS statements you need from your contractor, you can ask them to send you replacement copies.

If the contractor you鈥檙e working for stops trading and you have not been able to get all your CIS statements you should write to HMRC.

Include the following information:

• your name, address and Unique Taxpayer Reference (UTR)
• the name and address of the contractor
• the contractor鈥檚 tax reference - if you know it
• the dates of the payments or the tax months when the contractor paid you
• the reason why you do not have the statements or duplicates

Having gross payment status means contractors will pay you in full, without deductions. You鈥檒l pay all your tax and National Insurance at the end of the tax year.

To qualify

You must show HM Revenue and Customs (HMRC) that your business passes some tests. You鈥檒l need to show that:

• you鈥檝e paid your tax and National Insurance on time in the past
• your business does construction work (or provides labour for it) in the UK
• your business is run through a bank account

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

• 拢30,000 if you鈥檙e a sole trader
• 拢30,000 for each partner in a partnership, or at least 拢100,000 for the whole partnership
• 拢30,000 for each director of a company, or at least 拢100,000 for the whole company

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

Apply online or by post

You can apply for gross payment status by filling in an online or postal form. This will also register you for the Construction Industry Scheme (CIS) if you鈥檝e not already registered.

The form you fill in depends on whether you鈥檙e a:

• sole trader听
• partnership听
• limited company

Paying tax when you have gross payment status

You must declare your payments as income at the end of the tax year in:

• your Self Assessment tax return if you鈥檙e a sole trader or partner
• your Corporation Tax return if you own a limited company

If you have gross payment status, HM Revenue and Customs (HMRC) will review your business every year, to decide if you can keep your status.

You must be on time with your tax returns and payments to keep your gross payment status.

You do not meet all the conditions

You could fail the review and HMRC will remove your gross payment status. You鈥檒l be allowed a small amount of late payments or returns.

Contact HMRC if you have problems paying your tax on time. If HMRC give you more time to pay, this will not affect your gross payment status.

You fail your review

You鈥檒l get a letter explaining you鈥檙e about to fail the review, along with the reasons why.

If you disagree, you can write back with your reasons.

If HMRC accept your explanation, they will not remove your gross payment status.

If you do not reply to the letter or HMRC does not accept your explanation, they鈥檒l write to explain:

• what conditions you have not met
• that they鈥檙e withdrawing your gross payment status in 90 days

If you think HMRC have made the wrong decision, you have 30 days from the date of this letter to appeal.

Reapplying for gross payment status

If HMRC cancel your gross payment status, you need to wait a year from the date of the cancellation before you can reapply.

Report changes by calling the Construction Industry Scheme (CIS) helpline.

Tell them if you:

• change from a sole trader to a partnership
• leave a partnership or company to become a sole trader
• create a company or change your business to a company

You鈥檒l usually need to register again for CIS - as you cannot transfer the registration from your old business structure.

If you have gross payment status, you鈥檒l need to apply again.

You must also tell HM Revenue and Customs (HMRC) if you:

• change your trading name
• change your business, private or registered office address
• stop trading
• add new shareholders - HMRC may withdraw your gross payment status if you do not tell them within 30 days

Stop trading

If your business goes into administration it can keep receiving payments for work it鈥檚 done under CIS. It should be paid in the same way that it was paid normally - either gross or under deduction.