CIS Accounting — Built for the Construction Industry
The Construction Industry Scheme is one of the most administratively demanding areas of UK tax. Contractors face monthly filing obligations, verification requirements, and strict payment rules. Subcontractors need to ensure they're registered, tracking deductions, and reclaiming overpaid tax every year.
Clever Accounts has specialist experience in CIS accounting for both contractors and subcontractors — fixed monthly fee, dedicated accountant, no nasty surprises.
Key CIS Facts
Specialists in CIS accounting for contractors and subcontractors across the UK construction industry
The Basics
What is the Construction Industry Scheme?
The Construction Industry Scheme (CIS) is an HMRC scheme governing tax on payments made by contractors to subcontractors in the UK construction industry. Rather than subcontractors receiving their full fee and paying tax themselves at year end, contractors are required to deduct tax at source from every payment made.
Those deductions are paid to HMRC on the subcontractor's behalf and credited against the subcontractor's income tax and National Insurance liability. At year end, subcontractors file a self assessment return — and for most CIS workers, this results in a refund because more tax has been deducted in-year than they actually owe.
The scheme applies to most construction work in the UK — building, alterations, repairs, decorating, civil engineering, demolition, installation of systems — and covers both individuals and companies operating in the sector.
Deduction Rates
Subcontractors who have applied for and been granted gross payment status receive their full contract payment with no deduction. Requires passing HMRC's turnover and compliance tests.
The standard CIS deduction rate for subcontractors who are registered with HMRC under the scheme. Deductions are credited against your income tax and National Insurance liability at year end.
Applied to subcontractors who cannot be verified by HMRC — typically because they are not registered for CIS or the details provided do not match HMRC records. Registering for CIS avoids this higher rate.
Know Your Role
Contractors & Subcontractors — Different Obligations
CIS creates very different obligations depending on whether you engage other workers or work under contract yourself. Many people in construction are both — we handle both sides.
Contractors
Businesses that engage subcontractors
Verify subcontractors
Before making a first payment, contractors must verify each subcontractor with HMRC to determine the correct deduction rate (0%, 20%, or 30%).
Make CIS deductions
Deduct the correct percentage from each payment to a subcontractor (labour element only — materials are excluded from the deduction).
File monthly returns
Submit a CIS monthly return to HMRC by the 19th of each month detailing payments made and deductions taken in the previous tax month.
Issue payment & deduction statements
Provide each subcontractor with a payment and deduction statement within 14 days of the end of each tax month.
Penalties start at £100 for a late monthly return, rising to £3,000 or more for persistent non-compliance. We file every return on time.
Subcontractors
Individuals and businesses working under contract
Register with HMRC for CIS
Register before work starts to ensure you're on the 20% standard rate rather than the 30% higher rate. We handle registration as part of onboarding.
Provide your UTR to contractors
Your Unique Taxpayer Reference (UTR) is what contractors use to verify you with HMRC. Without it, they must deduct at 30%.
Track deductions suffered
Keep records of every payment and deduction statement you receive. These deductions will be offset against your tax liability at year end.
Reclaim overpaid tax at year end
Most CIS subcontractors overpay tax during the year. Your self assessment return is where you reclaim the difference — we make sure you don't miss a penny.
Most subcontractors overpay tax during the year. We reclaim every penny you're owed through your self assessment return.
Our CIS Service
What We Do For You
End-to-end CIS compliance and tax management — so you can focus on the build, not the paperwork.
CIS Registration
We register you with HMRC for the Construction Industry Scheme — whether as a contractor, a subcontractor, or both. Get on the 20% standard rate from the start.
Monthly Contractor Returns
We prepare and file your CIS monthly returns by the 19th deadline each month — covering all payments made, deductions taken, and subcontractor details.
Subcontractor Verification
We verify your subcontractors with HMRC before first payment, confirming the correct deduction rate for each worker to keep you fully compliant.
Year-End Tax Reclaim
We prepare your self assessment return and reclaim any CIS tax deducted in excess of your actual liability — getting overpaid tax back into your pocket.
Gross Payment Status Applications
We assess your eligibility and handle the application for gross payment status — so you can receive payments without any deduction being made.
Self Assessment Including CIS Income
Your full self assessment return, including all CIS income, deductions suffered, expenses, and any other self-employment income — filed accurately and on time.
Advanced CIS
Gross Payment Status — Get Paid Without Deductions
Gross payment status (GPS) is a special classification granted by HMRC that allows a subcontractor to receive their full contract payments from contractors without any CIS deduction being made. Instead of waiting until year end to reclaim overpaid tax, you keep your full cash flow throughout the year.
For businesses with significant construction turnover, the difference to cash flow can be substantial — hundreds or thousands of pounds that would otherwise be locked up until your self assessment return is processed.
HMRC sets strict criteria, but many established subcontractors qualify without realising it. We assess your eligibility, advise on any steps needed to meet the requirements, and handle the full application process.
Speak to an AccountantGPS Requirements
Turnover test
Net construction turnover (excluding materials and VAT) must meet HMRC's minimum threshold — £30,000 per director/partner or £100,000 for the business.
Compliance test
Your tax affairs must be up to date. HMRC checks that all returns have been filed and all taxes paid on time for the previous 12 months.
Business test
The business must be carrying on a construction business in the UK and dealing with construction contracts in the normal course of trade.
Benefits of Gross Payment Status
- Receive 100% of your contract payment from day one
- Improved cash flow — no waiting for year-end reclaims
- Signals credibility and compliance to contractors
- Reduces admin — no deduction statements to reconcile
- Tax is still owed at year end, but you manage it yourself
HMRC can withdraw GPS if compliance slips — that's why having a dedicated accountant keeping your affairs up to date is so important.
Making Tax Digital
MTD & CIS — What You Need to Know
Making Tax Digital for Income Tax (MTD for ITSA) is coming for all self-employed individuals — and CIS subcontractors are no exception. Here's how it affects you.
CIS subcontractors are self-employed — MTD for Income Tax (ITSA) applies from April 2026 if your income exceeds £50,000
From April 2027, the threshold drops to £30,000, bringing more CIS workers into quarterly reporting
FreeAgent (included free with Clever Accounts) tracks CIS deductions and submits quarterly updates directly to HMRC
Real-time deduction tracking through FreeAgent means year-end reclaims are faster and more accurate
CIS contractors must also ensure their subcontractors are MTD-ready where applicable
Gross payment status applications benefit from clean digital records — MTD compliance strengthens your case
FreeAgent is fully MTD-compatible — and it's included free
Every Clever Accounts package includes FreeAgent, HMRC's recognised MTD-compatible software. It tracks your CIS deductions and submits quarterly updates to HMRC automatically — no bridging software needed.
Client Stories
Trusted by the Construction Industry
“I used to lose hundreds every year because I wasn't claiming everything back. Clever Accounts got me registered for CIS, sorted my self assessment, and reclaimed nearly £3,000 in overpaid tax in the first year. Absolutely brilliant.”
Mark Hutchinson
CIS Subcontractor — Plastering
“The monthly CIS returns used to take me an entire day. Now Clever Accounts handles the whole thing. They verify my subbies, file the returns on time, and I haven't had a single HMRC penalty since switching.”
Alan Trevithick
Building Contractor
“Got gross payment status with their help — the difference to my cash flow has been massive. My accountant explained everything clearly and handled all the paperwork. Couldn't recommend them more.”
Wayne Pilkington
Self-Employed Electrician (CIS)
FAQ
CIS Questions Answered
Everything you need to know about the Construction Industry Scheme — from registration to gross payment status.
Let's Sort Your CIS Accounting
Whether you're a contractor filing monthly returns or a subcontractor chasing an overpaid tax reclaim — we've got you covered. Fixed monthly fee, dedicated accountant, no nasty surprises.
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