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How does the Construction Industry Scheme (CIS) work?

  • 2 min read
  • Last updated 14 Jun 2022

CIS (short for “the Construction Industry Scheme“) was set up by HMRC to collect income tax throughout the year from people working in the construction industry.

Construction companies deduct tax on behalf of their workers (subcontractors) and send the money to HMRC as tax payments:

  • 20% for workers who have registered themselves as subcontractors with HMRC
  • 30% for those who have not

Note that CIS only applies if you work in construction as a subcontractor and you have registered for CIS – here is how you do it.

Example of how CIS works

Big Woodworks Ltd hires John Carpenter on their site as a subcontractor. Every month John is owed £1,500 pounds for his work.

  1. Every month the company pays £300 (20% of the £1,500) to HMRC as John’s taxes
  2. The company sends a CIS statement or payslip to John as proof
  3. The company pays the remaining £1,200 to John as payment for his work

How do CIS refunds work?

In the example above, John’s annual income was £18,000 (£1,500 * 12).

John technically owes HMRC £2,370.20 (£1,230 Income tax + £1,015 national insurance).

However, throughout the year Big Woodworks Ltd paid £3,600 in taxes on John’s behalf!

John is now due a refund.

Need to file your CIS tax return?

Well, it’s your lucky day. Get your CIS tax return filed by an accredited accountant for just £149, all in. Our CIS accountants have specialist knowledge of construction worker tax needs including what expenses you can claim, how to maximise your profit, and more. 

Due a tax refund? We’ll take payment from your rebate for £239 if you prefer not to pay in advance.

CIS rebate calculator

Your situation

Outlined number oneImage of an arrow
In construction, your employment status is:
How much was your annual pay before tax?
Are you registered for CIS?

Results

Outlined number two
  • Estimated taxes already
    paid
    £0
  • Total tax
    £0
    £1,000 tax-free alowance
  • Refund due approximately
    £0

If you’re due a CIS refund, you can claim it back by filing a Self Assessment tax return.

HMRC will pay back the tax owed, usually a few weeks after you have filed the tax return.

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