TOLLEY_ICON4_SIGNIN Contact us
Home/ Tolley Tax Guidance/ Employment Tax / Indirect and third party employment relationships
Employment Tax

CIS ― subcontractors

Produced by Tolley
  • 13 May 2022 09:51

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • CIS ― subcontractors
  • Who is a subcontractor?
  • Overseas subcontractors
  • Registering as a subcontractor under the CIS
  • CIS payments to subcontractors
  • Gross payment status
  • Deduction of tax at a rate of 20%
  • Deduction of tax at a rate of 30%
  • Incorrect reporting of the tax withheld from the subcontractor
  • HMRC checks of gross payment status
    • More...

CIS ― subcontractors

The construction industry scheme (CIS) was devised to limit the amount of tax lost as a result of under-declarations or failures to notify chargeability by subcontractors, many of whom came to work in the UK for relatively short periods without paying any tax.

The scheme operates to withhold tax at source at the point when payments are made to subcontractors in respect of work which is defined as ‘construction operations’, thereby reducing the risk of a subsequent default by the subcontractor. Although, if the subcontractor can prove they have complied with their tax obligations and meet other tests (eg on prescribed level of turnover), they are able to receive payments gross.

The scheme has undergone regular changes since its inception and the current regime came into effect on 6 April 2007.

For a summary of the CIS, see the CIS ― overview guidance note.

Who is a subcontractor?

A party to a contract relating to construction operations is a subcontractor if they are under a duty to the contractor to carry out the operations, or to furnish their own labour or the labour of others in carrying out the operations. A contract relating to construction is a broad term; it can include contracts which cover a range of mixed activities of which construction operations form only a component part.

Where subcontractors provide labour other than just their own, they may themselves also be contractors. For more on contractors and their responsibilities, see the CIS ― contractors guidance note.

For the CIS to

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

TAKE A FREE TRIAL

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Owner-Managed Businesses

Class 2 national insurance contributions

Class 2 and Class 4 NIC are payable by self-employed earners and partners in a partnership. This guidance note considers Class 2 contributions. For Class 4 contributions, see the Class 4 national insurance contributions guidance note.Class 2 NIC arise where a self-employed individual has income

23 Mar 2022 17:20 | Produced by Tolley Read more Read more
Personal Tax

Trading profits and losses and tax credits

Migration of tax credits to universal creditNew claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take

22 Mar 2022 09:46 | Produced by Tolley Read more Read more
Personal Tax

Taxable state benefits

The majority of state benefits (also called social security benefits) are managed by the Department of Work and Pensions (DWP) via the Jobcentre Plus.Some benefits are dependent on a national insurance contribution record (and different classes of national insurance provide different benefit

25 Feb 2022 15:23 | Produced by Tolley Read more Read more