The Construction Industry Scheme (CIS) is a government initiative that has been designed to help contractors and subcontractors pay the right amount of tax to HM Revenue and Customs (HMRC). It’s applied to lots of different types of construction work that’s carried out in the UK and can apply to companies of various sizes and turnover. 

If you’re a construction business then you must register as a contractor with the Construction Industry Scheme ( CIS ) if you pay subcontractors to do construction work or if you’ve spent more than £3 million on construction in the 12 months, even if they’re not in the construction industry.

Whether you’re a sole trader, in a partnership or own a limited company, the rules above still apply but if you’re not sure if you need to register, take a look at the Gov.uk’s list of who’s covered by CIS.

They also set out some rules you must follow including:

• “You must register for CIS before you take on your first subcontractor.
•  You must check if you should employ the person instead of subcontracting the work. You may get a penalty if they should be an employee instead.
•  Check with HM Revenue and Customs (HMRC) that your subcontractors are registered with CIS.
•  When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.
•  You’ll need to file monthly returns and keep full CIS records – you may get a penalty if you do not.
•  You must let HMRC know about any changes to your business.”

Beyond staying on the right side of the HMRC, there are several benefits to being CIS registered, including:

• Peace of mind. As a CIS registered contractor, you can be confident you’re paying the right amount of tax and are not at risk of being investigated by HMRC. 
• Reduced risk of fraud. The CIS scheme helps to reduce the risk of fraud in the construction industry. It does this by making sure contractors are properly vetted and that payments are made via a secure payment system.
• Improved cash flow. CIS can help to improve your cash flow by making sure payments are made in full and on time.
• Increased opportunities. Contractors that are CIS-registered can be more likely to be considered for hire by major contractors as it shows a commitment to compliance. 

If you’re a contractor working in the construction industry, we’d always recommend becoming a registered member of CIS. It’s a simple process to join with lots of rewards to reap.

How to register for CIS

To register for CIS, you’ll need to give HMRC some basic information about you, your business and your tax reference number. You can register via the phone or post, as well as online. 

Once you’ve registered, you will receive your own unique CIS registration number, which must be added to all the invoices you send to contractors.

The UK is in the middle of a major cost of living crisis with inflation hitting a 40-year high. This has had a significant impact on businesses of all sizes but is particularly challenging for construction companies.

The construction industry is labour-intensive and the cost of living crisis has made it tricky for companies to attract and retain staff. Add this to the rising cost of materials, it puts a strain on businesses, their profits and on the people who run them. 

Here are seven tips to help you help your construction company weather the storm.

1. Review your expenses

Look carefully at your business expenses and see if there are any areas where you can cut back. For example, negotiating better deals with suppliers, reducing unnecessary spending or reducing waste.

2. Increase prices

Think about whether you’re able to put your prices up to offset rising costs. However, be careful not to put them up too much or you could lose customers who are also feeling the pinch.

3. Look for new revenue streams

Think about how you can generate new revenue, like expanding into new markets, launching new products or services or partnering with other companies to offer more services to more customers.

Contractors must legally register for the Construction Industry Scheme ( CIS ). The scheme means that contractors deduct money from a subcontractor’s payments and pass it to the HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.

However, there are some exemptions and reliefs that can apply to paying CIS and as always, we’re here to help you save money whenever and wherever possible.

Who has to pay CIS?

Whether you’re a sole trader, in a partnership or own a limited company, you must register as a contractor with the Construction Industry Scheme (CIS) if you pay subcontractors to carry out construction work. Even if you’re not in the construction industry, if you’ve spent more than £3 million on construction in the 12 months since you made your first payment, then you still have to register.

Who is exempt from HMRC CIS?

You don’t have to register as a contractor with the CIS is the work you’re carrying out is: 

• paid for by a charity or trust
• paid for by a governing body or by the head teacher of a school acting behalf of the local education authority
• on the subcontractor’s own property if the work costs less than £1,000 excluding materials. However, you must call the CIS helpline to get an exemption. 
• On a property not for sale or rent and for your own business use

The type of work being carried out also affects whether you’re exempt, for example:

• architecture and surveying
• scaffolding hire (labour not included)
• Carpet fitting
• Delivery of materials
• A canteen or other site facilities on a construction site that aren’t classed as construction themselves.