Construction Industry Scheme
How to register for CIS, and what it covers
Most explanations of CIS are written for accountants, and most of the rest tell you that you must register, which is not true for a subcontractor. Here is what the scheme actually does, which work it catches, why you might already be a contractor without realising, and what registering is really worth.
For UK subcontractors and small contractors · Checked against GOV.UK on 31 August 2026 · About 7 minutes
What the scheme actually does
Under the Construction Industry Scheme a contractor takes money out of what they pay a subcontractor and sends it to HMRC. It sits against that subcontractor’s record as an advance payment towards their Income Tax and National Insurance.
Which work it covers, and which it does not
The scope is broader than most people assume. It covers most construction work to a permanent or temporary building or structure, and civil engineering work such as roads and bridges. Site preparation, alterations, repairs, decorating and demolition are all in.
What sits outside the scheme is a shorter and more surprising list:
- Architecture and surveying
- Scaffolding hire, where no labour is supplied with it
- Carpet fitting
- Delivering materials
You might be a contractor without thinking of yourself as one
Contractor is a role, not a size. If you pay a subcontractor for construction work then you are a contractor for that work, and a sole trader who occasionally puts a day of groundwork or a second pair of hands through somebody else is doing exactly that.
Registering as a subcontractor is optional, and skipping it is expensive
Here is where most pages on this subject are misleading. They tell subcontractors they must register. GOV.UK does not say that: it says register if you do construction work for a contractor, and being unregistered is not an offence.
What changes is the rate.
| Rate | What it means | |
|---|---|---|
| Registered | 20% | The ordinary position for a subcontractor who has registered |
| Not registered | 30% | Not a penalty and not an offence. Just an extra tenth of your labour, held until you file |
| Gross payment status | 0% | Paid in full, and you settle the tax yourself. Has to be applied for and kept |
So the honest version is that registering is optional and skipping it is expensive. An extra ten per cent of your labour goes to HMRC on every job and stays there until you file, which on a year of steady subcontract work is a serious amount of your own money sitting where you cannot spend it. Registration is free.
How to register
Which registration you need depends on which side of the payment you are on, and it is perfectly normal to need both.
- As a subcontractor: register so a contractor deducts 20% rather than 30%. You need your Unique Taxpayer Reference and your National Insurance number
- As a contractor: register before you pay anyone for construction work, and you must then verify each subcontractor with HMRC before paying them
- Both, if you take work from a contractor and also put work out to somebody else. The two registrations are separate
Register as self-employed with HMRC first if you have not already. CIS sits on top of self-employment and does not replace it, which is the next section’s worth of confusion in a single sentence.
Gross payment status, and why most people do not have it
Gross payment status means a contractor pays you in full and you settle the tax yourself. It is the best position for cash flow and it is the hardest to get and keep: it has to be applied for, it depends on turnover and on a clean compliance record, and it can be taken away.
The rules around losing it tightened on 6 April 2026, and the wait before reapplying after it is removed for fraud went from one year to five. If you hold it, the consequences of a slip are now considerably heavier than most of the advice still online suggests.
Sources
- What is the Construction Industry Scheme, GOV.UKWhat the scheme does, who registers as a contractor and as a subcontractor, the £3 million rule, and the work that is covered and excluded. Read on 31 August 2026.
- Register as a CIS contractor, GOV.UKThe contractor registration route. Read on 4 September 2026.
- Register as a CIS subcontractor, GOV.UKThe subcontractor registration route, which is a separate journey from the contractor one. Read on 4 September 2026.
- Construction Industry Scheme: CIS 340, HMRCThe full guide, and the source for the deduction mechanics: what comes off before the percentage, and the monthly statement a contractor must give you.
Once you are in the scheme, the arithmetic is the bit that costs money
Almost nobody gets the percentage wrong. What goes wrong is the figure it is applied to: materials you paid for come off before the deduction is worked out, and a contractor who takes the percentage off your invoice total has taken too much. Check a statement before you accept it.
This is general information about how the Construction Industry Scheme works, checked against GOV.UK on 31 August 2026. It is not tax advice and it cannot take account of your own circumstances. Whether the scheme applies to a particular job, and on which side of it you are, turns on what was actually supplied. If your position is unusual, speak to an accountant or contact HMRC directly.