Navigating tax rules in the construction sector can be confusing, especially if you’re new to the industry or working for yourself. One of the most important schemes to understand is the Construction Industry Scheme (CIS). Whether you’re a contractor hiring other workers, or a subcontractor providing services, CIS may apply to you and could impact how you’re paid and taxed.
In this comprehensive guide, we’ll explain what the Construction Industry Scheme is, who needs to register, the benefits of doing so, who is exempt, and how you can claim tax back under CIS. If you’re unsure where to start, Swift Refunds are here to help. We’re experts in tax refunds for construction workers and can take care of your claim from start to finish.
What Is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme is a set of rules from HMRC that governs how contractors deduct tax from subcontractors in the UK construction sector. These deductions count as advance payments towards the subcontractor’s income tax and National Insurance.
In simple terms, if you work in construction and get paid by another business (not directly by a customer), you might have tax taken off your pay before you even receive it. This system helps ensure the correct amount of tax is paid to HMRC.
Who Needs to Register for the Construction Industry Scheme?
CIS applies to two main groups:
Contractors
You’re classed as a contractor if you pay subcontractors to do construction work. This could include building companies or property developers. Even businesses that don’t specialise in construction, like housing associations or local councils, can be considered contractors if they spend more than £3 million on construction in a year.
Contractors must:
- • Register for CIS before they hire subcontractors
- • Verify subcontractors with HMRC
- • Deduct the right amount of tax (usually 20% or 30%) from payments
- • Submit monthly CIS returns
Subcontractors
You’re a subcontractor if you do construction work for a contractor. This could include builders, labourers, electricians, plumbers, or any self-employed worker operating under a contract.
Subcontractors should:
- • Register with HMRC as a CIS subcontractor
- • Keep detailed records of income and expenses
- • Submit a Self Assessment tax return each year
Top tip: Subcontractors who are not registered under CIS will have 30% deducted from their pay, compared to 20% for those who are registered. Registering could help you keep more of your income.
Who Is Exempt from the Construction Industry Scheme?
Not everyone who works in or around construction is affected by CIS. The following are typically exempt:
- • Architects, surveyors, and other consultants
- • Scaffolding hire (with no labour)
- • Carpet fitting
- • Delivery of materials
- • Work on construction sites that are strictly administrative
Also, if you’re doing construction work for a private domestic customer (i.e. a homeowner), CIS doesn’t apply.
The Benefits of Registering for CIS
Registering under the Construction Industry Scheme (CIS) can help you:
✔ Keep more of your pay: Registered subcontractors are taxed at 20%, not 30%
✔ Stay compliant: Avoid penalties and keep your tax affairs in order
✔ Build a record with HMRC: This makes it easier to apply for things like gross payment status
What is Gross Payment Status?
If you’re a subcontractor and meet certain conditions, you can apply for gross payment status, which means you get paid in full with no deductions. You then pay tax through your Self-assessment return at the end of the year. This can significantly help with cash flow, especially for growing businesses.
How to Claim Tax Back Under the Construction Industry Scheme
Because tax is deducted from your pay in advance under CIS, many subcontractors end up overpaying. You may be due a refund, and we’re here to help you get it.
Here’s how to claim:
- Submit a self-assessment return – You’ll declare your total earnings, expenses, and CIS deductions.
- Include your CIS payment statements – These show how much tax has already been taken from you.
- Claim eligible expenses – These could include tools, travel, protective gear, and training costs.
- Receive your refund – HMRC will process your claim and refund any overpaid tax directly to you.
Doing this on your own can be time-consuming and easy to get wrong, which is why thousands of construction workers trust Swift Refunds to handle their CIS tax claims. Our expert team makes sure you get every penny you’re entitled to, with zero stress.
Need Help With CIS? Talk to the Experts at Swift Refunds
Understanding the Construction Industry Scheme can be overwhelming, especially when you’re focused on running your business or getting the job done on-site. But getting it right could mean hundreds, even thousands, back in your pocket.
At Swift Refunds, we specialise in tax refunds for construction workers. Whether you’re a sole trader, subcontractor, or limited company, we’ll guide you through the process and handle everything on your behalf. No jargon. No guesswork. Just the refund you deserve.
Get started today by contacting us and let us help you make the most of your CIS refund.
