The number that you receive from HMRC when you register as a contractor or subcontractor is known as your Construction Industry Scheme registration number. This is different from the validation number that contractors receive from HMRC when they validate a subcontractor.

You can claim a repayment of your Construction Industry Scheme (CIS) deductions if you’re a limited company subcontractor, or an agent of a limited company, if you’ve paid too much tax or National Insurance.

You will be classed as a contractor and should register for the CIS if you pay a subcontractor for construction work, or if your business does not carry out construction work but you have paid out more than £3 million in the 12 months since you made your first payment.

Subcontractors are those that carry out the construction work for a contractor.
If you do the following jobs, you do not need to register for CIS:

• architecture and surveying
• scaffolding hire (with no labour)
• carpet fitting
• making materials used in construction including plant and machinery
• delivery of materials
• work on construction sites that would not be classed as construction, such as running a canteen or site facilities

CIS covers both contractors and subcontractors operating in the construction industry within the UK.
This includes sole traders, partnerships and limited companies.

Other organisations such as local authorities, housing associations and property developers are also obligated to CIS if they have an annual spend of more than £1 million over 3 years.

The CIS rules only apply to payments made by contractors to subcontractors, and not employees who work directly for the contractor.

The type of work covered under CIS includes:

• Demolition and construction
• Site preparation for a construction project
• Alterations and dismantling
• Repairs and decorating

CIS does not affect construction work carried out beyond the UK in another country. If a non-UK business carries out construction work in the UK, however, they must register for CIS.

The HMRC Construction Industry Scheme was first introduced as a tax evasion prevention measure in 1972, and an updated CIS came into effect in 2007.

The key elements of the scheme are that if you are a contractor employing a subcontractor, you must deduct the tax for payments and pay them directly to the HMRC. These CIS tax payments contribute to the subcontractor’s overall tax and National Insurance bill for the year.

To put it simply, if you are a bricklayer, for example, and you are employed by a construction company to carry out work on a project, your payment for the job will have the tax deducted before it is paid into your bank account.

If you’re registered under the Construction Industry Scheme, or would like to know if you should be, please get in touch. The Sapphire team are experienced and fully compliant, providing support for thousands of clients using the Construction Industry Scheme.

You can be safe in the knowledge that we will ensure the correct CIS deductions are calculated and paid to HMRC each month so there won’t be any surprising tax bills. We will also process your expenses for any job materials and provide you with a statement of earnings.

We understand that tax returns can be a complicated and time-consuming process, so let us complete your self assessment tax return accurately and on time.

Our experienced team of specialist contractor accountants ensure you receive advice to maximise your earnings and that your tax return is filed on time, so you only pay the correct amount of tax before the submission deadline. In fact, many of our self-employed workers receive a tax rebate at the end of this process.