If you work for a contractor, you must register for CIS. Under the scheme, the contractor you are working for will generally deduct 20% from the labour portion on your invoice and pass it to HMRC. These deductions count as advance payments towards your tax and National Insurance bill.

What is the purpose of the CIS scheme?

The Construction Industry Scheme (CIS) sets out a series of rules for how contractors should make payments to sub-contractors. The scheme was introduced in order to try and prevent the loss of revenue to the Exchequer arising from payments between contractors not being properly accounted for for tax purposes.

What happens if you dont register for CIS?

If you do not register under CIS, the immediate consequence is a higher tax deduction rate of 30% (rather than 20%). But the trouble doesn't stop there. If you fail to register for CIS, tax returns will still need to be completed. Failure to submit tax returns can lead to fines and estimated tax bills.