CIS Tax Rebate

The Construction Industry Scheme (CIS) is a tax deduction scheme which involves tax being deducted at source from payments which relate to construction work. Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). These deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

  • Contractor

A contractor is a business or other concern that pays subcontractors for construction work.

Contractors may be construction companies and building firms, but may also be government departments, local authorities and many other businesses that are normally known in the industry as ‘clients’.

Some businesses or other concerns are counted as contractors if their average annual expenditure on construction operations over a period of 3 years is £1 million or more.

Private householders aren’t counted as contractors so aren’t covered by the scheme.

  • Subcontractor

A subcontractor is a business that carries out construction work for a contractor.

Who counts as a contractor or subcontractor?

Register as a contractor if either:

  • you pay subcontractors for construction work
  • your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period

You should register for the Construction Industry Scheme (CIS) if you work for a contractor and you’re one of the following:

  • self-employed
  • the owner of a limited company
  • a partner in a partnership or trust

How to register

To register for the Construction Industry Scheme (CIS) you’ll need:

  • your legal business name – you can also give a trading name if it’s different to your business name
  • your National Insurance Number
  • the unique taxpayer reference number (UTR) for your business
  • your VAT registration number (if you’re VAT registered)

If you’re a subcontractor and a contractor (you pay subcontractors to do construction work), you’ll need to register for CIS as both.

Deduction rates

When a contractor pays you under CIS, they’ll normally make deductions at the standard rate of 20%.

Contractors will make deductions at a higher rate of 30% if:

  • you aren’t registered for CIS
  • they can’t verify you
  • you give the wrong name for your business

Your contractor should give you monthly statements of payments and deductions. Use them to calculate whether you still owe tax and National Insurance to HM Revenue and Customs (HMRC) or are due a refund.

Gross payment status

You can apply for gross payment status when you register for CIS. This means the contractor won’t make deductions from your payments and you’ll pay all your tax and National Insurance at the end of the tax year.

What doesn’t count as your pay?

Contractors won’t make a deduction from amounts you charge on your invoice for:

  • VAT
  • materials
  • equipment
  • plant hired for the job
  • manufacturing or prefabricating materials

How to claim

Claim online

Claim a repayment online using the form.

You’ll need a Government Gateway account for HM Revenue and Customs (HMRC) online services – you can set one up from the sign-in page.

You need to submit your claim by post if you want HMRC to pay an agent or other nominated representative.

Claim by post

Write to the HMRC and make sure that you include:

  • your full company name
  • your PAYE reference number(s)
  • the reasons for the overpayment
  • a completed R38 forum if you want your refund to be paid to an agent or other representative

If you want HMRC to pay the refund into a bank account, you’ll need to provide the:

  • bank account number
  • sort code
  • account holder’s name