You do not have to register for the Construction Industry Scheme (CIS) as a subcontractor. Registration is optional. But if you choose not to register, contractors will deduct 30% from your labour payments instead of the standard 20%.
That extra 10% is money sitting with HMRC instead of in your pocket. For a subcontractor earning £40,000 per year in labour payments, the difference between the 20% and 30% deduction rate is £4,000 per year. Registration is free and takes minutes. For almost every subcontractor, registering is the obvious choice.
Who Needs to Register for CIS?
| Situation | Do You Need to Register? |
| You are a sole trader doing construction work for a contractor | Not legally required but strongly recommended |
| You are a limited company doing construction work as a subcontractor | Not legally required but strongly recommended |
| You want to pay the 20% deduction rate instead of 30% | Yes — registration is what unlocks the lower rate |
| You want to apply for gross payment status (0% deductions) | Yes — you must be registered first |
| You are a contractor paying subcontractors | Yes — contractors must register for CIS |
The key distinction is between contractors and subcontractors. Contractors must register for CIS — it is a legal requirement. Subcontractors are not legally required to register, but the financial penalty for not doing so (an extra 10% deduction on every payment) makes registration the sensible default for almost everyone.
What Happens if You Do Not Register?
If you are not registered for CIS when a contractor pays you, HMRC cannot verify your status. The contractor is required by law to deduct 30% from the labour portion of your payment rather than the standard 20%.
That 30% is not lost forever. It is held by HMRC as an advance payment toward your tax bill and is reconciled through your Self Assessment tax return at year end. If more was deducted than you owe, you receive a refund. But the money is tied up with HMRC throughout the year rather than available to you.
| The cost of not registering A subcontractor earning £3,000 per month in labour payments loses £300 per month to the higher deduction rate compared to a registered subcontractor earning the same amount. Over a year that is £3,600 sitting with HMRC instead of in the business. Registration takes around five minutes online and costs nothing. |
How to Register for CIS as a Subcontractor
Step 1. Make sure you have a Unique Taxpayer Reference (UTR). To register for CIS, you need a UTR. If you are already registered for Self Assessment as a sole trader, you already have one. If not, register for Self Assessment first and HMRC will send you a UTR in the post within 10 working days.
Step 2. Have your National Insurance number ready. You will need your NI number to complete the CIS registration. For a limited company, you also need the company’s UTR and company registration number.
Step 3. Register online through HMRC. Call HMRC’s CIS helpline on 0300 200 3210, or register online through your Government Gateway account. Select ‘register as a subcontractor’ and follow the steps. The process takes around five minutes.
Step 4. Wait for verification. Once registered, HMRC adds you to the CIS system. The next time a contractor verifies you before making a payment, HMRC will confirm your 20% rate. There is no certificate to receive — your status is verified electronically each time a contractor checks.
CIS Registration for Limited Companies
If you operate through a limited company as a subcontractor, the registration process is the same but you register using the company’s details rather than your personal details. You will need:
- The company’s UTR (sent to the registered office address after the company is incorporated)
- The company’s registration number from Companies House
- The company’s name exactly as registered at Companies House
Contractors verify limited companies through the same HMRC online system. When verified, HMRC confirms the company’s deduction rate. A registered limited company subcontractor receives the 20% rate rather than 30%.
What Is Gross Payment Status?
Gross payment status (GPS) is the highest level of CIS registration. It allows a subcontractor to receive full payment from contractors with no CIS deductions at all. You handle your own tax through Self Assessment at year end.
To qualify for gross payment status, your business must pass three tests:
| Test | Requirement |
| Business test | You must be carrying on a business in the construction industry in the UK |
| Turnover test | Sole traders: net construction turnover of at least £30,000 per year. Partnerships: £30,000 per partner or £100,000 total. Limited companies: £30,000 per director or £100,000 total |
| Compliance test | You must have a good compliance record with HMRC: tax returns filed on time, tax payments made on time, no outstanding debt to HMRC |
Gross payment status is reviewed annually by HMRC. If you fail the compliance test at any point, HMRC can withdraw gross payment status and you revert to the standard 20% deduction rate. Maintaining a clean compliance record is therefore essential once you hold GPS.
What Is the Difference Between CIS Registration and Self Assessment?
CIS registration and Self Assessment are two separate things that work together. CIS registration determines your deduction rate when contractors pay you. Self Assessment is how you declare your income and expenses at the end of the tax year and reconcile the CIS deductions against your actual tax liability.
You need both. CIS registration without Self Assessment means deductions accumulate with HMRC but are never reconciled and any refund you are owed is never claimed. Self Assessment without CIS registration means you are paying the higher 30% deduction rate unnecessarily.
CIS Registration: Common Questions
Is CIS registration free?
Yes. Registering as a CIS subcontractor with HMRC is completely free. There are no fees for registration, verification, or maintaining your CIS status. Anyone offering to register you for CIS for a fee is charging you for something HMRC provides at no cost.
How long does CIS registration take?
The registration process itself takes around five minutes online or over the phone. Your status is updated on HMRC’s system within a few working days. The next time a contractor verifies you, HMRC will confirm your 20% deduction rate.
Can I register for CIS and gross payment status at the same time?
Yes. You can apply for gross payment status as part of the CIS registration process. HMRC will assess your application against the business, turnover, and compliance tests. If you do not qualify immediately, you are registered at the standard 20% rate and can reapply for gross payment status once you meet the criteria.
What happens to my CIS deductions at year end?
CIS deductions made throughout the year are treated as advance payments toward your tax bill. When you file your Self Assessment return, HMRC calculates your actual tax liability and offsets the CIS deductions against it. If more was deducted than you owe, HMRC refunds the difference. If less was deducted, you pay the balance.
I work for multiple contractors. Do I need to register separately with each one?
No. You register once with HMRC for CIS. Every contractor you work with verifies you through the same HMRC system and receives the same deduction rate instruction. You do not need to register separately with each contractor.
Can I deregister from CIS if I stop doing construction work?
Yes. You can contact HMRC to deregister from CIS if you are no longer working in construction. If you later return to construction work as a subcontractor, you can register again at that point.
Get Your CIS Registration and Tax Right From the Start
M&B Tax Services handles CIS registration, Self Assessment returns, and CIS refund claims for construction subcontractors across the UK. We make sure you are on the right deduction rate, claiming every allowable expense, and filing on time.
We are ICB-regulated accountants based in Rugby. If you are working under CIS and are not sure whether your tax affairs are in order, we can review your position and give you a straight answer.
Book a free 30-minute call and we will check your CIS status and Self Assessment position at no cost.
Joanna Bruty
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