What is CIS (Construction Industry Scheme)?

The Construction Industry Scheme (CIS) is a UK government tax system designed specifically for the construction sector. Under CIS, contractors deduct money from subcontractors’ payments and pass it directly to HMRC as an advance towards the subcontractor’s tax and National Insurance.

CIS applies to most construction work, including building, repairs, decorating, demolition, and civil engineering. Both contractors and subcontractors must register with HMRC, and the rate of deduction depends on the subcontractor’s registration status:

• 20% for registered subcontractors

• 30% for unregistered subcontractors

• 0% for those with gross payment status (approved by HMRC)

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How does CIS impact you?

For Subcontractors

• Reduced cash flow: Deductions are taken before you receive payment, which can affect day-to-day finances.

• Tax already paid: The deductions count towards your annual tax bill, which may reduce what you owe—or result in a refund.

• Administrative requirements: You must keep accurate records of payments and deductions.

For Contractors

• Legal responsibility: You must verify subcontractors, apply the correct deduction rates, and submit monthly returns to HMRC.

• Compliance risk: Errors or late filings can result in penalties.

• Record keeping: Detailed records of payments and deductions are required.

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Benefits of using an accountant for CIS

1. Ensures Full Compliance

CIS rules can be complex and frequently updated. An accountant ensures that all registrations, verifications, and submissions are completed correctly and on time—reducing the risk of penalties.

2. Improves Cash Flow Management

An accountant can help subcontractors claim tax refunds efficiently and advise on gross payment status, helping you retain more of your income upfront.

3. Saves Time and Reduces Stress

Handling CIS administration can be time-consuming. Outsourcing to an accountant allows you to focus on running your business rather than dealing with paperwork.

4. Accurate Record Keeping

From tracking deductions to preparing monthly returns, an accountant ensures your records are accurate, organised, and ready for HMRC inspection.

5. Tax Efficiency

Accountants can identify allowable expenses and ensure you’re not overpaying tax, maximising your take-home income.

6. Expert Advice

Whether you're a contractor or subcontractor, an accountant can provide tailored advice on structuring your business, managing growth, and staying compliant with HMRC.

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Summary

The Construction Industry Scheme is a crucial part of the UK construction sector, affecting how tax is handled for both contractors and subcontractors. While it ensures tax compliance, it also introduces administrative complexity and cash flow considerations. Working with an experienced accountant helps you stay compliant, save time, and make the most of your earnings.

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Let M&B Tax Services handle your CIS reclaim

Our professional CIS specialists are trained to support you throughout the process of CIS tax returns, unavoidable in the building industry. Making only one mistake can end up with paying much more tax than you should. Our expertise in this field along with professionalism and experience in working with construction workers will provide you with the highest standard of CIS tax returns.

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Contractors include property developers and builders but do not have to be limited to this. Not construction-based businesses with annual spending more than £1 million per year or construction work over three years may also need to be CIS registered.

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A subcontractor however, is a person under the duty to the contractor to carry out construction operations or provides staff to perform these operations, receiving payments under the contract with the contractor.

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Both parties should register for the scheme, contractors are obligated by the law and subcontractors in order to avoid higher rate deduction payments.

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The CIS rules and regulations makes it a long and complicated process resulting with penalties for failures of meeting the obligations which are also very difficult and expensive to resolve.

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Book a no obligation consultation, we support every step of the journey.

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CIS Registration & Setup

We handle the entire CIS registration process with HMRC, ensuring you are set up correctly from the start—whether you’re a contractor or subcontractor.

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Subcontractor Verification

For contractors, we verify all subcontractors with HMRC and ensure the correct deduction rates are applied, keeping you fully compliant.

 

Monthly CIS Returns

We prepare and submit your monthly CIS returns accurately and on time, helping you avoid costly penalties and stay stress-free.

 

Payslips & Deduction Statements

We generate clear, compliant CIS deduction statements for subcontractors, ensuring transparency and proper documentation.

 

Bookkeeping & Record Keeping

We maintain accurate, up-to-date financial records, tracking all income, expenses, and CIS deductions to keep your business organised and compliant.

 

Tax Returns & CIS Refunds

For subcontractors, we prepare and submit self-assessment tax returns and ensure you reclaim any overpaid tax quickly and efficiently.

 

Gross Payment Status Applications

We assess your eligibility and handle applications for gross payment status, helping you get paid in full without deductions where possible.

 

VAT Returns

We manage VAT registration and submissions, including the Construction Industry Domestic Reverse Charge where applicable.

 

Payroll Services

We run payroll for your business, ensuring employees are paid correctly and all PAYE obligations are met.

 

Business Advice & Support

We offer ongoing support and expert advice to help you grow your business, improve cash flow, and remain compliant with HMRC regulations.

 

Why Choose Us?

• Industry-specific expertise in construction and CIS

• Reliable, accurate, and fully compliant services

• Friendly, approachable support when you need it

• Transparent pricing with no hidden costs

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Get Started Today

Whether you're just starting out or looking to streamline your existing processes, we’re here to help. Get in touch today to see how we can support your business.

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