What you must do as a Construction Industry Scheme (CIS) subcontractor
Pay tax and claim back deductions
When you’re registered with the Construction Industry Scheme (CIS), you’re still responsible for paying the correct tax and National Insurance for your business, even if deductions have been made by contractors throughout the year.
Contractors will give you a monthly statement of what they’ve paid you and deductions they’ve made to help with your accounting.
Sole traders and partners
At the end of the tax year, send in your Self Assessment tax return as usual. You should record:
- the full amounts on your invoices as income
- any deductions contractors have made in the ‘CIS deductions’ field
HM Revenue and Customs (HMRC) will work out your tax and National Insurance bill and take off any deductions made by contractors.
If you still owe tax after this, you’ll need to pay it by 31 January following the end of the tax year.
If you’re due a tax refund, HMRC will pay the money back.
Limited companies
If you have gross payment status, declare all your income in your Corporation Tax return as usual.
If you pay CIS deductions, you must claim these back through your company’s monthly payroll scheme. Do not try to claim back through your Corporation Tax return - you may get a penalty if you do.
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Send your monthly Full Payment Submission (FPS) as usual to HMRC.
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Also send an Employer Payment Summary (EPS). Enter the total CIS deductions for the year to date.
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HMRC will take your CIS deductions off what you owe in PAYE tax and National Insurance. Pay the balance by the usual date.
If your company’s PAYE bill for the period is reduced to zero and you still have some CIS deductions you have not been able to claim back, carry these forward to the next month or quarter (in the same tax year). Tell HMRC in the EPS that you have nothing to pay.
If HMRC thinks your claim is wrong
HMRC may ask you to provide evidence for your CIS deductions or to change your claim.
If you do not do this by the deadline they give you, HMRC will correct your claim and you will not be able to make any more claims in that tax year.
You can appeal HMRC’s decision. They’ll tell you how to do this.
Keep records
Your company must keep a record of amounts claimed back against your monthly or quarterly PAYE bill.
You can use form CIS132 to do this or keep your own records.
If you paid too much in CIS deductions
HMRC will pay back any deductions your company has not been able to claim back from its PAYE bill during the tax year.
If your company goes into administration
If your company goes into administration or you liquidate your company, the person managing it should write to HMRC to ask for CIS deductions to be repaid straight away.
PT Operations
HM Revenue and Customs
BX9 1BX
If you do not have all your CIS statements
If you have not received all the CIS statements you need from your contractor, you can ask them to send you replacement copies.
If the contractor you’re working for stops trading and you have not been able to get all your CIS statements you should write to HMRC.
Include the following information:
- your name, address and Unique Taxpayer Reference (UTR)
- the name and address of the contractor
- the contractor’s tax reference - if you know it
- the dates of the payments or the tax months when the contractor paid you
- the reason why you do not have the statements or duplicates
PT Operations
HM Revenue and Customs
BX9 1BX