As a construction accountant with years of experience helping trades businesses, a common question I hear is: “Do I need to register for CIS?” Let’s break down everything you need to know about CIS registration requirements.
What is CIS?
The Construction Industry Scheme (CIS) is a tax deduction scheme operated by HMRC that sets rules for how payments must be handled between contractors and subcontractors in the construction industry.
Who Needs to Register as a Contractor?
You must register as a CIS contractor if:
- Your business is in construction and you pay subcontractors for construction work
- Your business spends an average of more than £1 million per year on construction operations over a 3-year period
- Your business is not in construction but spends over £1 million on construction in any 12-month period
Key Example
If you run a building company and regularly hire bricklayers, plasterers, or electricians as subcontractors, you must register as a CIS contractor.
Who Needs to Register as a Subcontractor?
You should register as a CIS subcontractor if you:
- Work for a contractor in the construction industry
- Do any kind of construction work, including:
- Building work
- Electrical installations
- Plumbing
- Painting and decorating
- Site preparation
- Scaffolding installation
Important Note
Even if you’re a sole trader or limited company, you need to register if you’re doing construction work as a subcontractor.
What Happens If You Don't Register?
The consequences of not registering when required include:
- Contractors must deduct 30% from your payments instead of 20%
- Potential penalties from HMRC
- Difficulty securing future construction contracts
Next Steps for Registration
- Check your business status using HMRC’s CIS tool
- Gather necessary information:
- UTR (Unique Taxpayer Reference)
- National Insurance number
- Company registration number (if applicable)
- Register online through your HMRC Government Gateway account
Common Registration Mistakes to Avoid
- Waiting until after starting construction work
- Not keeping registration details updated
- Assuming sole traders don’t need to register
- Forgetting to register as both contractor and subcontractor if you operate in both capacities
Expert Tips
As an accountant specialising in construction, I recommend:
- Register at least 2-3 weeks before you need to make or receive CIS payments
- Keep detailed records of all construction work and payments
- Consider using CIS-specific accounting software to manage deductions
- Set up a separate business bank account for CIS transactions
Need More Help?
In our next post, we’ll cover “How to Complete Monthly CIS Returns”
Stay compliant and profitable,
