What counts as work covered by the Construction Industry Scheme?

What is the Construction Industry Scheme?

CIS is a tax deduction scheme for both contractors and subcontractors in the construction sector – its aim is to reduce levels of fraud and tax evasion in the industry by ensuring that subcontractors declare their tax and National Insurance (NI) to HMRC.

It’s often mistaken for an additional tax, but it’s not too dissimilar to the PAYE system for employees in that it requires contractors to withhold either 20% or 30% of the subcontractor’s payments to then pay on to HMRC on their behalf.

For more information on CIS, take a look at our Construction Industry Scheme page.

Registering for CIS as an umbrella company contractor

A contractor must register for the scheme. A subcontractor, however, can choose not to, but this will affect the deduction rate; so, those who are CIS registered will have 20% withheld from their pay and for those who are not, this increases to 30%.

In this case, an umbrella company contractor is a subcontractor.

It’s important to be aware that an umbrella company doesn’t have any involvement with the CIS process, meaning the umbrella contractor will need to register for the scheme themselves.

What counts as work covered by the Construction Industry Scheme?

As a rule, CIS covers the majority of construction work that involves a permanent or temporary building or structure, as well as civil engineering work, such as roads and bridges.

Examples of the type of duties covered by CIS include:

• Preparing a site for work, as well as the clean-up inside a building after work has been carried out.
• Demolition
• Any repairs or alterations
• Decorating
• Installing systems for heating, lighting, power, water and ventilation

Duties that don’t fall under the scheme, include:

• Carpet fitting
• Making materials used in construction
• Hiring out scaffolding (with no labour)
• Architecture and surveying
• Running site facilities

We hope you have found this page useful. If you have any further questions on CIS or anything else, our team of experts are available to answer any queries, so give us a call on 01206 591 000 or email jaime.thorpe@contractorumbrella.com.