How to register for CIS as a contractor
If you are registering as a CIS contractor, the process is linked to becoming an employer with HMRC.
HMRC’s current guidance explains that you register as a contractor by following the process for setting up as a new employer. Once registered, HMRC sends you information including your PAYE reference number, which is used as part of your CIS administration.
You should complete this process before you take on your first subcontractor.
After registering, you will need to use HMRC’s CIS services to verify subcontractors, report payments and deductions and meet your ongoing CIS obligations.
GOV.UK: Register as a CIS contractor
How to register for CIS as a subcontractor
The registration process is different if you are registering as a subcontractor.
Before registering, make sure you have the relevant tax information for your business. Depending on your business structure, HMRC may require information including:
- Your legal business name
- Your trading name, if different
- Your Unique Taxpayer Reference (UTR)
- Your VAT registration number, if applicable
- The date your business started trading
- Your National Insurance number, where applicable
- Your Companies House registration number, if you operate through a limited company
- Relevant partner details if you operate through a partnership
HMRC provides an online registration process and paper forms for different types of business.
GOV.UK: Register as a CIS subcontractor
Registering a limited company
If you operate through a limited company, you will generally need your company’s Unique Taxpayer Reference (UTR) and Companies House information.
HMRC’s company registration process can also involve providing information about directors and people with significant control, depending on the application.
For companies applying for gross payment status, HMRC may also require evidence relating to turnover and business activity.
What is CIS gross payment status?
When you register as a CIS subcontractor, you will normally receive payments under deduction. This means the contractor deducts CIS tax from your payment before paying you.
However, you may be able to apply for gross payment status.
With gross payment status, contractors do not deduct CIS tax from your payments. Instead, your business receives the full amount due, excluding any other applicable deductions, and you account for your tax and National Insurance through the normal tax process.
Gross payment status is not automatic. HMRC applies specific tests covering areas such as your business activity, turnover and tax compliance.
It is also worth noting that from 6 April 2026, HMRC has stronger powers to remove gross payment status immediately where it believes a business knew, or should have known, that it was part of a tax-fraudulent supply chain. Keeping your tax affairs fully up to date is therefore more important than ever if you hold or are applying for gross payment status.
Gross payment status turnover requirements
For an individual business, HMRC currently requires relevant construction turnover of at least £30,000. Different calculations apply to partnerships and companies, including rules based on the number of relevant people in the business. HMRC also provides alternative turnover tests in certain circumstances.
HMRC also considers whether your business has complied with its tax obligations and whether it is genuinely carrying out qualifying construction work or providing labour for construction.
For a limited company, gross payment status can therefore be particularly useful for cash flow, but you should not apply simply because you want to avoid CIS deductions. You need to meet HMRC’s qualifying conditions.
What happens after you register for CIS?
Registration is only the beginning. If you are a contractor, CIS creates a number of ongoing administrative responsibilities.
When you engage a subcontractor, you generally need to:
- Check whether the worker should actually be employed rather than treated as self-employed.
- Verify the subcontractor with HMRC.
- Determine the correct CIS payment status.
- Calculate any applicable CIS deduction.
- Pay the subcontractor the correct amount.
- Give the subcontractor the required payment and deduction statement.
- Report the relevant information to HMRC.
- Pay CIS deductions to HMRC by the required deadline.
- Keep appropriate CIS records.
HMRC confirms that contractors must verify subcontractors and make the appropriate deductions when required.
How much CIS tax is deducted?
The standard CIS deduction is currently:
- 20% for registered subcontractors receiving payment under deduction.
- 30% for subcontractors who are not registered or cannot be verified correctly.
- 0% for subcontractors with approved gross payment status.
The calculation is not always as simple as taking a percentage of the total invoice. Certain amounts, such as VAT and qualifying materials paid for directly by the subcontractor, can be excluded from the CIS deduction calculation.
For example, if a subcontractor invoices £5,000 plus £1,000 VAT and £2,000 relates to qualifying materials they have paid for themselves, the CIS calculation is not necessarily based on the full £6,000 invoice total.
HMRC provides detailed rules on what should and should not be included when calculating CIS deductions.
CIS monthly returns and deadlines
If you are a CIS contractor, you normally need to submit a CIS monthly return to HMRC covering payments made to subcontractors during the relevant tax month.
The CIS tax month runs from the 6th of one month to the 5th of the following month.
The monthly return must normally be submitted by the 19th of the month following the end of the CIS tax month.
For example, payments made between 6 August and 5 September fall into the August CIS tax month and the return is normally due by 19 September.
You also need to pay any CIS deductions to HMRC by the relevant payment deadline.
Nil CIS returns from April 2026
One important change for businesses to be aware of in 2026 is the reinstatement of the requirement for mainstream CIS contractors to deal with nil returns.
From 6 April 2026, if a mainstream contractor has not made any payments to subcontractors during a CIS tax month, it must submit a nil return or notify HMRC of a period of inactivity. Failing to do either can result in a penalty.
A nil return is due by the same deadline as a normal monthly return, the 19th of the month following the tax month. If you know you will not be paying subcontractors for a while, you can instead notify HMRC in advance of a period of inactivity, commonly for up to six months, which pauses the requirement to file monthly returns during that time.
This makes it particularly important not to assume that you can simply ignore CIS administration during quiet periods.
CIS penalties
HMRC can issue penalties where CIS returns are late, incomplete or incorrect, and where businesses fail to maintain the required records.
For a late CIS monthly return, the penalty regime can include:
- £100 initial fixed penalty.
- £200 further fixed penalty if the return remains outstanding after two months.
- A further penalty after six months, generally the greater of £300 or 5% of the CIS deductions shown on the return.
- A further penalty after 12 months, depending on the circumstances and whether information was deliberately withheld.
HMRC can also impose penalties for incomplete or incorrect returns. Contractors may face penalties of up to £3,000 where required CIS records cannot be produced, or where certain subcontractor statements have not been provided correctly.
The best approach is therefore to treat CIS as a regular accounting and compliance responsibility rather than something to deal with when HMRC contacts you.
Common CIS registration mistakes to avoid
Registering too late
If you are a contractor, you should register before taking on your first subcontractor. Waiting until after payments have been made can create unnecessary compliance problems.
Using the wrong business details
Subcontractors should provide contractors with the same legal or trading name used when registering for CIS, together with the correct UTR. Incorrect details can cause verification problems and potentially result in the higher 30% deduction being applied.
Assuming CIS registration proves self-employment
CIS registration does not determine employment status. If someone should legally be treated as an employee, the contractor may need to operate PAYE instead.
Forgetting about CIS when paying your own subcontractors
A construction company can be a CIS subcontractor when working for another contractor while also becoming a CIS contractor when it pays its own subcontractors. Make sure your accounting processes cover both sides.
Ignoring materials when calculating deductions
CIS calculations can be affected by qualifying materials and other excluded amounts. Applying a flat percentage to every invoice without checking the underlying calculation can lead to incorrect deductions.
Failing to keep records
Keep invoices, payment records, subcontractor details, verification information, CIS statements and monthly returns in an organised system. Good record keeping makes both routine bookkeeping and any HMRC enquiry much easier.
Practical tips for managing CIS
If your business regularly works with subcontractors, a few simple processes can make CIS much easier to manage.
- Set up CIS before your first subcontractor payment.
- Verify every relevant subcontractor through HMRC before making payments.
- Keep CIS records alongside your normal bookkeeping records.
- Use accounting or payroll software that supports CIS where appropriate.
- Set a monthly CIS deadline in your calendar for the 19th.
- Check whether a nil return or inactivity notification is required when no subcontractors have been paid.
- Reconcile CIS deductions against your bank payments and accounting records.
- Keep subcontractor statements and provide the required information promptly.
- Review gross payment status regularly if you or your company have it.
Do subcontractors need to register for CIS if they are a limited company?
If your limited company carries out construction work for a contractor, you should register for CIS so that the contractor can verify your company and apply the correct payment treatment.
Without CIS registration, a contractor will generally have to deduct 30% from your payments rather than the standard 20% deduction.
A limited company can also apply for gross payment status if it meets HMRC’s requirements.
Can I register for CIS and gross payment status at the same time?
Yes. If you are eligible, you can apply for gross payment status as part of the CIS registration process.
HMRC will assess the application against the relevant conditions. Until gross payment status is confirmed, the business may initially be registered for payment under deduction.
How long does CIS registration take?
The time required can vary depending on your business structure, whether HMRC already holds the required tax records and whether you are applying for gross payment status.
Online applications are generally the most straightforward option. If you are applying for gross payment status, make sure your turnover information and supporting evidence are accurate and readily available, as this can affect the process.
Official CIS guidance and resources
For the latest rules, registration requirements and detailed technical guidance, it is always sensible to check the current HMRC information:
Registering for CIS Conclusions
If your business operates in construction, getting CIS registration right from the outset can save a lot of administrative hassle and help you avoid unnecessary tax deductions and HMRC penalties.
Contractors need to register before taking on their first subcontractor and then verify subcontractors, calculate deductions, submit monthly returns and maintain accurate records. Subcontractors should register so that contractors can apply the correct 20% deduction rather than the higher 30% rate, unless they have approved gross payment status.
The CIS rules can become complicated when you have a mixture of employees, subcontractors, materials, VAT and different types of construction work. If you are unsure whether CIS applies to your business, or you want help managing CIS alongside your bookkeeping and tax affairs, speaking to an accountant can help ensure everything is set up correctly from the beginning.
Need help with CIS? Accounting Wise can help UK businesses understand their CIS obligations, keep accurate records and stay on top of their wider accounting and tax responsibilities.
