How do I register for the Construction Industry Scheme as a subcontractor?

Register for CIS with HMRC online through your Government Gateway account or by phone, once you are registered for Self Assessment as self-employed and have your Unique Taxpayer Reference. Registered subcontractors have 20% deducted, unregistered ones 30%, and gross payment status means no deduction at all.

Before you register

You need to be registered as self-employed with HMRC, so you have a Unique Taxpayer Reference, and you need your National Insurance number. If you have not registered for Self Assessment yet, do that first.

The three rates

• 20%: registered subcontractors.
• 30%: subcontractors who are not registered.
• 0%: gross payment status. You are paid in full and settle your tax through your return.

Deductions are taken from the labour part of an invoice, not from the cost of materials, provided the materials are shown separately.

Gross payment status

To qualify you must pass three tests. The business test: you do construction work, or provide labour for it, in the UK. The compliance test: your tax and National Insurance have been paid on time. And the turnover test: over the last 12 months at least £30,000 for a sole trader, excluding VAT and materials. Partnerships and companies have their own turnover thresholds. You can apply online.

Worked example

What to do

1. Register for Self Assessment if you have not.
2. Register for CIS with HMRC, online or by phone.
3. Tell contractors you are registered so they can verify you.
4. Once established, check whether you meet the gross payment tests.

Common mistakes

• Waiting weeks and having 30% taken.
• Forgetting to keep the monthly deduction statements.
• Applying for gross payment status with a poor compliance record.

Sources: GOV.UK: CIS for subcontractors · GOV.UK: gross payment status