CIS Compliance Hub: UK Construction Tax Guides

The Construction Industry Scheme (CIS) is a UK tax scheme where contractors deduct money from subcontractor payments and pass it to HMRC. It applies to all contractors paying subcontractors for construction work, including labour-only and materials-and-labour contracts.

There are three CIS deduction rates: 0% for subcontractors registered for gross payment, 20% for registered (verified) subcontractors, and 30% for unregistered or unverified subcontractors. Materials costs are not subject to CIS deductions.

Verification is the process of checking a subcontractor's details with HMRC before making payment. HMRC confirms the subcontractor's name, UTR (Unique Taxpayer Reference), and the correct deduction rate to apply. Verification must be done for each new subcontractor and periodically re-verified.

For individuals: name, UTR, and National Insurance number. For companies: company name, UTR, and company registration number. For partnerships: partnership name, UTR, and partner details. You can verify online through HMRC or by phone.

CIS returns must be submitted monthly to HMRC, by the 19th of each month following the tax month (which runs from 6th to 5th). Late returns incur penalties starting at £100 and increasing for continued non-compliance.

No. CIS deductions only apply to the labour element of payments. If a subcontractor supplies both labour and materials, the materials cost should be excluded from the CIS calculation. You need clear invoicing to separate these costs.