Glossary · UK

What is CIS (Construction Industry Scheme)?

HMRC scheme for taxing payments to construction subcontractors — 20% or 30% deduction.

Full Definition

The Construction Industry Scheme (CIS) requires contractors to deduct tax from payments to subcontractors and pass it to HMRC. Deduction rate: 20% for verified subcontractors registered with HMRC, 30% for unverified. CIS counts as advance payment of subcontractor's Income Tax + Class 4 NI — reconciled via Self Assessment at year end. Applies to: construction operations including site prep, demolition, alterations, repairs, decorating. Gross payment status (0% deduction) available if turnover £30k+/director + good compliance history. Contractors must verify subcontractors monthly, file CIS300 returns, give monthly statements to subcontractors. Common in trades — electrician, plumber, builder, roofer.