
What is The Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a tax deduction scheme in the UK, overseen by HM Revenue and Customs (HMRC), that applies to the construction industry. Under CIS, contractors deduct money from a subcontractor’s payments and pass it to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Contractors must register for the scheme, while subcontractors don’t have to, but deductions are taken from their pay at a higher rate if they’re not registered. It’s important to note that the scheme covers all types of businesses that engage in construction work – not just builders, but also companies like decorators and electricians. The aim of CIS is to minimize tax evasion in the construction industry, which has historically been a high-risk sector for hidden employment and underreported earnings.