What is the Construction Industry Scheme or CIS?

The Construction Industry Scheme (CIS) was extensively revised in April 2007. The scheme sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.

The scheme applies mainly to contractors and subcontractors in mainstream construction work; however, businesses or organisations whose core activity isn’t construction but have a high annual spend on construction may also count as contractors and fall under the scheme.

What contractors need to do under Construction Industry Scheme (CIS)

As a contractor you have certain obligations under the CIS, including registering with the scheme, checking whether your subcontractors are registered with HMRC, paying subcontractors and submitting monthly paperwork.

What subcontractors need to do under CIS

If you are a subcontractor, your main obligation is to register with HMRC – as well as your individual or main business name you can register up to one trading name. You must also keep HMRC informed of any changes to your business (including changes to the structure, address, business name, partners etc).

How does the CIS process work?

Some CIS scheme providers offer a quick self-employment test that helps you check your employment status.

For each week that you work they will collect your approved timesheet, and pay rates direct from your agency. They process your payment according to your CIS tax status, making payment direct to your bank account on the Friday following your working week. For example, for a timesheet that ends Friday 5th, the payment will be made on Friday 12th.

As a self-employed individual you will be responsible for your National Insurance Contributions; when you sign up for self-employment you’ll be asked to pay NI by direct debit – the easiest way to ensure you’re up-to-date with contributions and eligible for NI benefits.

You will be sent an SMS notification of your net pay each time a payment is processed and you’ll receive a complete detailed weekly breakdown of your pay history in a monthly summary at the end of each tax month in accordance with the rules of the CIS scheme.