What is CIS Registration?

Construction Industry Scheme (CIS) Registration refers to the process by which contractors and subcontractors in the construction industry formally register under the Construction Industry Scheme, a tax scheme administered by HM Revenue and Customs (HMRC). The CIS aims to streamline the taxation of individuals working within the construction sector.

For Contractors: Registration is mandatory for those who either engage subcontractors or, if not directly operating a construction business, have expended over £3 million on construction-related activities within a 12-month period. Once registered, contractors are required to deduct tax from payments made to subcontractors and remit these deductions to HMRC. 

For Subcontractors: Registration is not obligatory but is highly recommended. Registered subcontractors benefit from a reduced deduction rate of 20%, compared to 30% for those who are not registered. This registration status affects the rate of tax deducted from payments received for construction work.

Registration under the CIS ensures compliance with tax regulations and can affect the financial arrangements and tax liabilities for both contractors and subcontractors operating within the construction industry.