What is the Construction Industry Scheme?
The Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.

The scheme applies mainly to contractors and subcontractors in mainstream construction work, however businesses or organisations whose core activity isn't construction but have a high annual spend on construction may also count as contractors and fall under the scheme.

Types of work and business structures covered by CIS

CIS can apply to all types of businesses that work in the construction industry in the UK. These include:

As well as traditional construction businesses like builders, the scheme can also apply to businesses like:

• labour agencies and staff bureaux
• gangmasters - or gang leaders
• property developers

Even if your business or organisation doesn't do building work, it might still be a mainstream contractor or HMRC may treat it as a "deemed contractor"  and require it to register with CIS if  it spends more than an average of £1 million a year on construction operations over a three year period. The types of businesses and organisations that this could apply to include:

• some large businesses
• housing associations
• other 'arm’s length' management organisations (ALMOs)
• local authorities
• government departments
• other public bodies

What are construction operations?

CIS covers construction operations carried out in the UK. The rules of the scheme define the types of work that are classed construction operations. But as a general rule the scheme includes almost any work that's done to a:

• permanent building
• temporary structure
• civil engineering work or installation

Some examples of the types of construction work that are covered by the scheme include jobs like:

• site preparation
• general construction - bricklaying, roofing, plastering and so on
• alterations and extensions
• repairs and refurbishment
• decorating
• dismantling work
• demolition

The scheme defines 'construction' as a term with a broad meaning that includes:

• building things
• making things
• putting things together
• assembling things

So, construction work includes, for example, assembling prefabricated units and site facilities that have been made off-site.
Contractor registration and obligations

The Construction Industry Scheme (CIS) is a set of rules for contractors and subcontractors in the construction industry. If you're a CIS contractor (including a deemed contractor), you'll need to register with HM Revenue & Customs (HMRC). You'll also have to follow certain rules to make sure you pay your subcontractors within the scheme correctly.

The things you'll need to do include:

• verifying your subcontractors with HMRC
• paying your subcontractors in the right way - making deductions if necessary
• paying over deductions to HMRC
• giving subcontractors deduction statements
• sending monthly returns to HMRC
• keeping proper records

When are you a subcontractor under CIS?

CIS uses its own special definition of the term subcontractor. So even if you don't normally think of yourself as a subcontractor, you could be treated as one under CIS.

Under the rules of CIS you're a subcontractor if you agree to do construction work for a contractor. It doesn't matter how you actually carry out the work - you could do it yourself, get your employees to do it, use your own subcontractors or make some other arrangement.

Subcontractors can be self-employed individuals, any type of business, or other bodies and organisations. Some examples of construction industry subcontractors include:  sole traders, partnerships and companies that do construction work for contractors labour agencies and staff bureaux that use their own workers to do construction work for a contractor - or that supply (but not just introduce) workers to a contractor, gang leaders who contract to do work for a contractor, and are paid for the work done by their gang foreign businesses paid to do construction work in the UK, or in UK territorial waters, local authorities, and public bodies that do construction work for someone else.