CIS for Subcontractors Explained: A Complete UK Guide
If you’re working in construction as a subcontractor in the UK, understanding how the Construction Industry Scheme (CIS) works is essential. It directly affects how you get paid, how much tax is deducted, and whether you could be owed a refund.
Many subcontractors find CIS confusing at first—and without the right knowledge, it’s easy to overpay tax or fall behind on compliance with HM Revenue & Customs.
In this guide, we’ll explain CIS for subcontractors in simple terms, how it works, what you need to do, and how Akount can help you maximise your income and stay compliant.
What Is CIS?
The Construction Industry Scheme (CIS) is a tax system introduced by HM Revenue & Customs to regulate payments in the construction sector.
How It Works
Contractors deduct tax from subcontractors’ payments
The deducted amount is sent to HMRC
It counts as an advance payment towards your tax bill
In simple terms: you receive your income after tax has already been deducted.
Who Counts as a Subcontractor?
You’re considered a subcontractor if you:
Types of Work Covered
CIS applies to a wide range of construction activities, including:
CIS Deduction Rates for Subcontractors
The amount of tax deducted depends on your registration status with HM Revenue & Customs.
Standard Rates
20% – Registered subcontractors
30% – Unregistered subcontractors
0% – Gross payment status
What Is Gross Payment Status?
This allows you to:
Gross status improves cash flow but must be applied for and approved.
How You Get Paid Under CIS
When you invoice a contractor, the deduction is applied to your labour costs.
Example
Invoice:
Labour: £1,000
Materials: £200
CIS deduction (20%) applies only to labour:
£200 deducted
You receive:
£1,000 total payment
Materials are not subject to CIS deductions.
What Records Do You Receive?
Each time you’re paid, the contractor should provide:
Keep these documents safe-they’re essential for your tax return.
Do Subcontractors Still Need to File a Tax Return?
Yes. Even though tax is deducted, you must still:
CIS deductions are advance payments, not your final tax bill.
Can You Get a Tax Refund?
In many cases, yes.
Subcontractors often receive refunds because:
Many subcontractors are owed money but don’t claim it.
What Expenses Can Subcontractors Claim?
You can claim expenses to reduce your taxable income.
Common Allowable Expenses
Claiming expenses correctly can significantly increase your refund.
Responsibilities as a CIS Subcontractor
To stay compliant with HM Revenue & Customs, you must:
Failure to comply can result in penalties.
Common CIS Mistakes to Avoid
Many subcontractors make avoidable errors such as:
These mistakes can cost you money and lead to penalties.
Should You Be a Sole Trader or Limited Company?
Subcontractors can operate as either:
Sole Trader
Limited Company
Choosing the right structure can significantly affect your tax position.
How Akount Can Help CIS Subcontractors
CIS can be confusing—but with the right support, you can stay compliant and maximise your income.
Akount provides specialist CIS accounting services tailored to subcontractors.
CIS Registration
We register you with HM Revenue & Customs and ensure you’re set up correctly.
Tax Return Preparation
We prepare and submit your Self-Assessment tax return accurately and on time.
Expense Optimisation
We ensure all allowable expenses are claimed—maximising your refund.
CIS Refund Claims
We help you reclaim any overpaid tax from HM Revenue & Customs.
Bookkeeping Support
We manage your finances using tools like Xero and QuickBooks.
Ongoing Advice
We provide year-round support so you:
Why Use an Accountant for CIS?
Working with an accountant can make a huge difference:
Many subcontractors who handle CIS themselves miss out on money.
Final Thoughts
CIS is a key part of working in the construction industry as a subcontractor in the UK.
Understanding how it works helps you:
Speak to Akount Today
If you’re a subcontractor and need help managing CIS, Akount is here to support you.
We provide expert CIS accounting services designed to help you keep more of what you earn.
Contact Akount today and let us simplify your CIS while maximising your income.