The CIS is a set of special rules for handling payments made by contractors to subcontractors for construction work. If your business works in the construction industry or does construction related work then it may need to register with HM Revenue & Customs (HMRC) as either a contractor or a subcontractor under CIS.

Certain other businesses and organisations may need to register with HMRC as contractors if they spend more than a certain amount each year on 'construction operations' covered by the scheme. They may have to do this even if their main activity is nothing to do with construction.

This guide will help you decide if the work you do - or have done for you - is covered by CIS.

If you advise businesses and organisations that are involved with construction work, it'll help you decide whether or not they should register with HMRC and operate CIS.

On this page:

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:

  • self-employed individuals working as sole traders
  • partnerships
  • companies
  • limited liability partnerships (LLPs)

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

If your business is based outside the UK, the CIS still applies if it does work in the UK, or UK territorial waters, that is covered by the scheme.

If you're based outside the UK and you plan to carry out construction work that's covered by the scheme, you'll need to register with the CIS. Contact the HMRC Charity, Assets and Residence (CAR) CIS team on Tel +44 151 472 6273 to register before you start work in the UK.

Businesses or other organisations whose work is covered by the CIS could be contractors, subcontractors, or both. HMRC use specific definitions of the terms contractor and subcontractor, so even if you don't think of yourself as a subcontractor in the traditional sense you may still be covered.

Find out if you're a contractor or a subcontractor under CIS

Find out about non- UK resident businesses and CIS

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 as 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.

You can find out more about the types of work that are covered by the scheme in HMRC’s Construction Industry booklet CIS340 (see link below).

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.

CIS also uses specific definitions of terms like alteration, repair and extension. You can look up the definitions in HMRC’s booklet CIS340 'Construction Industry Scheme - guide for contractors and subcontractors'.

Obtain booklet CIS340 'Construction Industry Scheme - guide for contractors and subcontractors (PDF 267K)'

Work that can sometimes be construction work

There are some types of work that aren't automatically treated as construction operations, but can be in certain situations. For example, tree planting and landscaping aren't construction operations if they're part of estate management or forestry work. But HMRC would treat them as work that's covered by the CIS if they were done in the course of building a new housing development.

Contracts with some construction work and some non-construction work

If you get a single contract that covers several tasks but only some of them are construction operations, HMRC will treat the whole contract as coming under the CIS. They will do this even if you put the different tasks on separate invoices.

Businesses, individuals and work not covered by the CIS

Businesses which do not include construction operations aren't covered by the CIS rules as long as they spend less than £1 million a year on construction work.

Property investment businesses - but not property developers - aren't covered by the CIS as long as they spend less than £1 million a year on construction operations. Property investors buy properties to let out - or to make money when they sell them on.

Private householders who get construction work done on their own property - or have a new house built for themselves - aren't CIS contractors.

Own build - construction work on a business' own property

If your business is a deemed contractor and it pays for construction work on a property that it uses itself, these payments aren't covered by the CIS. This would apply to work done on a property that's used by:

  • your business for its own purposes | another company in the same group | another company in which your company owns at least 50 percent of the shares.

But it doesn't apply to property that's:

  • let commercially to others | up for sale or let | held as an investment.

If all of the £1 million plus your business spends each year relates to its own property, you can ask HMRC to de-register you from the CIS. You can call HMRC’s CIS Helpline.

This rule doesn't apply to deemed contractors that aren't businesses - like local authorities and government departments.

Read about own build spending and CIS in HMRC’s internal CIS Manual

Learn about deemed contractor status in HMRC’s guide to deemed contractors

Payments of less than £1,000 for construction work

If you're a deemed contractor you can ask HMRC for permission not to report certain small payments for construction work that's normally covered by the CIS.

HMRC may let you do this if the payment's less than £1,000 - excluding materials costs - and you're a:

  • deemed contractor paying for work on your own property | contractor paying a subcontractor to do work on their own property | contractor paying a subcontractor for work on an agricultural property where they're the tenant.

To ask permission to ignore small payments like this you'll need to Contact HMRC’s CIS Helpline.

Charities and schools

Charities don't have to apply the CIS to payments they make for construction work. But this doesn't apply to their trading arms.

The CIS rules don't apply to payments for construction work made by the head teachers and governing bodies of maintained and voluntary aided schools on behalf of the local authority.

Learn how public bodies operate under CIS in HMRC’s guide Public Bodies and organisations under CIS

Services provided on the construction site

Providing services for workers on a construction site isn't a construction operation. Neither is the provision of facilities needed for operating the site. Some examples include:

  • workers' canteens | workers' hostels | temporary offices for site workers | temporary toilets and showers for workers | medical facilities | safety services | security patrols

Other construction-related tasks that are never construction operations

Some jobs are specifically excluded from the CIS. They include:

  • professional work, like architects' services | scaffolding hire - with no labour | fire alarm installation | carpet fitting | manufacturing things like windows, blinds and shutters off-site | making and putting up signs | delivering materials

Every business is different. If you've got any questions about whether your business is affected by the CIS you can call HMRC’s CIS Helpline.

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