The Construction Industry Scheme (CIS) is a specialist UK tax and payroll process for businesses that pay subcontractors for construction operations, and for subcontractors paid through the scheme. It does not decide whether a person is genuinely self-employed: consider employment status separately before treating an individual as a subcontractor.
Start with the role and the work
Before a payment is made, establish whether the business is acting as a contractor, a subcontractor, or both. Check the contract, the nature of the construction work, the paying entity and whether the payment falls within CIS. Keep this assessment with the work and payment records.
A practical contractor routine
- Register with HMRC where required before using the scheme.
- Obtain the subcontractor’s correct details and verify them through the CIS service before the relevant payment.
- Use HMRC’s verification response to identify the applicable deduction treatment. The usual outcomes are gross payment, 20% or 30%; do not select a rate from an invoice or an assumption.
- Calculate any deduction from the qualifying amount. CIS deductions are not made from VAT, and direct materials costs may be excluded where the conditions are met. Keep clear material evidence.
- Make the payment, retain the calculation and issue any required payment and deduction statement.
- Reconcile every reportable payment to the monthly CIS return, submit the return by the applicable deadline and retain the acknowledgement.
A practical subcontractor routine
Keep every payment and deduction statement, reconcile deductions to the amounts received and raise a query promptly where the payer’s statement does not reflect the agreement or payment. CIS deducted from a subcontractor’s payment is a deduction on account; it is not a substitute for understanding the business’s own tax position.
Dates and specialist advice
HMRC’s current guidance says monthly CIS returns are normally due by the 19th after the end of the tax month. Where a contractor deducts CIS, it must provide the subcontractor with a payment and deduction statement within 14 days after the end of the relevant tax month. Check the official guidance immediately before filing because facts such as employment status, materials, VAT treatment, gross-payment status, corrections and no-payment periods can change the required action.
This guide is an introduction to a specialist scheme. It is not a status determination, tax calculation, payroll instruction or advice for a particular labour arrangement.
Related FoxSums resources
- Monthly CIS Contractor Checklist
- CIS Subcontractor Information Checklist
- CIS Labour and Materials: What Gets Deducted?
- CIS Verification: A Practical Guide for Contractors
- CIS Deduction Calculator for Contractors
- CIS Refund Guide for Limited Company Subcontractors
Next step
If CIS applies, use the subcontractor-information checklist before the first payment rather than collecting sensitive details in an open document.
Important
General information only. Check the facts and current official guidance for the business’s circumstances.
Sources and review
- Evidence check date: 2 November 2026. This is a specialist construction and trades resource; it is not presented as general small-business compliance guidance.
- GOV.UK - CIS contractor deductions and payment statements
- GOV.UK - CIS monthly returns
- GOV.UK - CIS340