The short answer
Contractors must register for CIS. Subcontractors are not required to register, but HMRC says a higher deduction rate normally applies when they are not registered. The actual registration is completed with HMRC; this guide helps you identify the role and records to prepare first.
Check these points before you register
Your role
Decide whether you pay subcontractors, carry out construction work for a contractor, or do both. CIS uses those roles in a specific way.
Your business identity
Use the legal business name and UTR that match HMRC records. A limited company needs its company details as well.
Your start date and VAT details
Have the trading-start date and VAT number if registered. Do not guess dates or identifiers in a registration.
What happens after registration
A contractor needs a process for verifying new subcontractors, deductions, monthly returns and records. A subcontractor needs CIS statements for its tax position.
Are you a contractor, subcontractor or both?
A contractor pays subcontractors for construction work. A subcontractor carries out construction work for a contractor. A business can be both, and HMRC says it must register in both categories if that is its position. CIS can also apply to a non-construction business once its construction spend passes the relevant threshold.
The scheme covers much construction work, including building, alterations, repairs, decorating and installing building systems. It also has exceptions. Use HMRC's CIS scope guidance for the current definitions rather than classifying work from a trade label alone.
What does a subcontractor need?
HMRC's registration guidance asks for the legal business name, business UTR, VAT number where applicable and trading-start date. It may also need identity, company, partnership or joint-venture details depending on the structure.
With a UTR, a sole trader, partnership or limited company can use HMRC's online service for net-payment-status registration. If a subcontractor does not have a UTR, HMRC directs a new business to register for Self Assessment and select working as a subcontractor. The registration itself is completed on GOV.UK's CIS registration service.
What does a contractor need?
A contractor registers through the new-employer process and then receives the information needed to operate CIS, including an employer PAYE reference. Before paying a new subcontractor, the contractor may also need to verify them with HMRC and apply the rate HMRC returns.
Those are operational duties, not a one-off form. Our payroll service can support the ongoing reporting once the business has established its role and registration.
Why the deduction rate is not the final tax bill
CIS deductions are advance payments towards a subcontractor's tax and National Insurance. They are not the subcontractor's final liability. Records of CIS deductions and the wider income and expenses position are needed for the annual return or company process.
Use HMRC for the registration
RR Accountants does not collect Government Gateway details or imitate HMRC's form. Once your role and facts are clear, register through the official service or ask us to help with the accounting and records around the process.
Related construction guidance
CIS registration FAQs
Who must register for CIS?
Contractors must register if they pay subcontractors for construction work. A business can also be a contractor if it is not in construction but has spent more than £3 million on construction in the 12 months since its first payment. A subcontractor should register if they do construction work for a contractor; otherwise a higher deduction rate normally applies.
Can I be both a CIS contractor and subcontractor?
Yes. If you do construction work for a contractor and also pay subcontractors to do construction work, HMRC says you need to register in both roles.
What do subcontractors need to register for CIS?
HMRC lists the legal business name, business UTR, VAT registration number if registered, and trading-start date. Depending on the business, further details can include a National Insurance number, Company Registration Number, partner details or a joint-venture agreement.
Does CIS registration mean a subcontractor is an employee?
No. HMRC says employees do not need CIS registration. Employment status should be checked if the working arrangement is unclear. CIS deductions are advance payments towards tax and National Insurance, not a decision on employment status.
Who makes CIS deductions and at what rate?
The contractor makes any CIS deduction from the subcontractor payment after applying the rate HMRC gives when the subcontractor is verified. HMRC lists 20% for registered subcontractors, 30% for unregistered subcontractors and 0% for gross-payment status. The deduction is an advance payment towards the subcontractor's tax and National Insurance, not the final tax bill.
When must a CIS contractor send a monthly return?
A CIS contractor must send the monthly return to HMRC by the 19th of the month following the last tax month. The CIS tax month runs from the 6th to the 5th, so a return for 6 May to 5 June must reach HMRC by 19 June. Use HMRC's CIS service for the return and check its current guidance if a deadline or correction is in question.
General information only, not a substitute for HMRC registration, employment-status or personal tax advice. Check the actual contracts, work and business records before registration.