The Construction Industry Scheme (CIS) is a tax deduction scheme operated by HMRC that applies to payments made by contractors to subcontractors in the construction industry. Rather than subcontractors invoicing for their full gross amount and paying tax later through self-assessment, CIS requires the contractor to deduct tax at source and pass it directly to HMRC.
The scheme was introduced to reduce tax evasion in the construction sector, where a large proportion of the workforce operates on a self-employed basis and may move between jobs and employers frequently. By deducting tax at source, HMRC ensures tax is collected before the money reaches the subcontractor.
CIS applies to a wide range of construction activities including groundwork, building, installation, demolition, repairs, alterations, and decorating. It does not apply to architecture, surveying, or other professional services that aren't directly related to construction work.
CIS applies if you are a subcontractor in construction working for a contractor (rather than directly for the homeowner or end user). Common trades include:
When you use Abevelit for your CIS payroll, we take full responsibility for every HMRC obligation — so you never have to worry about compliance.
Before any payment is made, we verify every subcontractor with HMRC to confirm their registration status and establish the correct deduction rate — 20%, 30%, or 0% for gross payment status holders.
We submit your monthly CIS returns to HMRC on time, every month. Returns detail every subcontractor paid and the deductions made. Late returns attract automatic penalties, which we eliminate completely.
Every subcontractor receives a deduction statement with each payment, showing gross payment, any materials deduction, and the CIS tax withheld. These are essential documents for subcontractors completing their year-end tax return.
Where subcontractors supply materials as part of their work, we ensure these costs are correctly excluded from the CIS deduction calculation — reducing the amount withheld and improving cash flow.
We process payments on the same day we receive funds from the contractor or agency. Subcontractors receive their net pay promptly, along with an itemised payment statement.
Every aspect of our CIS process is built around HMRC's requirements. We stay up to date with changes to CIS legislation and ensure our processes reflect the latest guidance at all times.
Whether you're a contractor using us to pay your subcontractors, or a subcontractor coming to us directly, here's exactly how the process works.
Complete our online registration form and provide your Unique Taxpayer Reference (UTR). We'll use this to verify your CIS status with HMRC immediately.
We check your status with HMRC and confirm your applicable deduction rate — 20% for registered subcontractors, 30% for unregistered. We'll also note any materials costs to be excluded from the calculation.
Once work is complete, submit your invoice or timesheet through our portal or directly to your agency. Include details of any materials costs you've incurred so we can apply the correct deduction.
We apply the correct CIS deduction to your labour element, calculate the net payment due, and transfer it directly to your bank account on the same day we receive funds.
We issue a CIS deduction statement confirming the gross amount, materials excluded, deduction rate applied, tax withheld, and net payment made. Keep these — you'll need them at year end.
Gross payment status (GPS) allows qualifying subcontractors to receive the full value of their invoices without any CIS deduction. Instead of tax being withheld at 20%, you receive your full gross payment and pay any tax owed through your self-assessment tax return.
To qualify for GPS, HMRC requires that your business meets certain criteria around turnover, compliance history, and business structure. We can help you understand whether you might qualify and guide you through the application process if appropriate.
If you already hold gross payment status, simply provide us with confirmation when you register and we'll ensure no deductions are made from your payments.
Talk to our teamLet us know when you register and we'll verify your status with HMRC and process all your payments at the 0% rate immediately.
The CIS deductions withheld from your payments are not a final tax payment — they are advance payments on account of your annual tax liability. At the end of the tax year, when you complete your self-assessment tax return, any CIS deductions you've had made on your behalf are offset against the tax you owe.
If the total CIS deductions made exceed your actual tax liability for the year — which is common for subcontractors who have significant business expenses to claim — HMRC will refund the difference.
This is why the deduction statements we provide with every payment are so important. Keep them safe — your accountant or tax adviser will need the totals at year end to complete your return accurately and claim any refund you're entitled to.
We provide a statement with every payment. Store these securely — you'll need the annual totals for your self-assessment return.
The deadline for online self-assessment returns is 31 January following the end of the tax year. Penalties apply for late submission.
If CIS deductions exceed your tax bill, HMRC will refund the difference after processing your return — often within a few weeks.
From sole traders taking on residential projects to larger contractors managing multiple teams, we handle CIS for builders at every scale.
Electrical and plumbing subcontractors working across domestic, commercial and industrial sites on both short and long-term contracts.
Specialist trades working on a subcontract basis for roofing and scaffolding contractors across all types of construction project.
Groundworkers, road builders, drainage specialists and civil engineering subcontractors working on infrastructure and large-scale development.
Workers providing labour without materials — a common arrangement in construction — where CIS deductions apply to the full labour value.
Small contractors who are required to register under CIS and need help managing their monthly returns and subcontractor payments compliantly.
Register with Abevelit Payroll today. We'll verify your CIS status, set up your account, and have you ready to receive your first payment within 24 hours.