How to register for CIS as a contractor or subcontractor.

First, work out which side you are on

CIS registration depends on the role you play on a job, not on your trade or the size of your business.

• You are a contractor if you pay subcontractors to do construction work.
• You also count as a contractor if your business does not do construction work but has spent more than £3 million on construction in the 12 months since its first payment for that work.
• You are a subcontractor if you do construction work for a contractor as a sole trader, a partner in a partnership, or through your own limited company.

Employees do not register for CIS. If you are on a payroll and taxed through PAYE, the scheme does not apply to you.

Many building firms sit on both sides. A firm might take on work from a main contractor and also pay its own subcontractors. HMRC says a business in that position must register in both roles. The two registrations are separate, so doing one does not cover the other.

How to register as a contractor

There is no separate CIS form for contractors. HMRC asks you to follow the process for setting up as a new employer. That registration gives you a PAYE scheme, and your CIS work runs through it.

The timing matters. You must register for CIS before you take on your first subcontractor. You also cannot register as an employer more than 2 months before you start paying people. So the sensible window is the run-up to your first subcontractor payment.

Step 1: Register as a new employer

Use the GOV.UK new employer service. Most limited companies with between 1 and 9 directors can register online. Other business types are pointed to the right route from the same GOV.UK page.

Step 2: Wait for the HMRC letter

HMRC sends a letter with the information you need to start working. It includes your employer PAYE reference number. GOV.UK has a tool to check when you can expect that letter. Do not plan to pay a subcontractor until you have it.

Step 3: Set up how you will verify and file

Once registered, you need a way to verify subcontractors and send monthly returns. You can use the free HMRC CIS online service or commercial CIS software. If you need to verify more than 50 subcontractors, HMRC says you must use software.

What contractors must do after registering

Registration is the start, not the finish. As a contractor you are expected to:

• Verify each new subcontractor with HMRC before you first pay them. You also verify a subcontractor you have used before if they have not appeared on one of your CIS returns in the current or last 2 tax years.
• Make deductions at the rate HMRC gives you when you verify, and pay them to HMRC.
• Give each subcontractor a payment and deduction statement within 14 days of the end of each tax month.
• File a monthly return by the 19th of the month after each tax month. A tax month runs from the 6th to the 5th. For example, the return for 6 May to 5 June must reach HMRC by 19 June.
• Keep full CIS records and tell HMRC about changes to your business.

See our guides on how to pay CIS deductions online and on CIS payment and deduction statements.

To verify, you need your own UTR, your Accounts Office reference and your employer PAYE reference. From the subcontractor you need their UTR plus:

• Sole trader: their National Insurance number. Temporary numbers cannot be verified.
• Limited company: the company name, company UTR and company registration number.
• Partnership: the nominated partner's details, the trading name and the partnership UTR.

The details must match what the subcontractor gave HMRC when they registered. If they do not match, the check will not confirm the subcontractor's status.

How to register as a subcontractor

Online is the quickest way. Registering online puts you on net payment status, sometimes called payment under deduction. That means a contractor takes 20% from your invoices and passes it to HMRC. The deduction is worked out after taking off items such as VAT and materials you paid for directly. If you do not register at all, contractors must deduct 30% instead.

What you need to hand

• Your legal business name, plus your trading name if it is different
• Your Unique Taxpayer Reference (UTR)
• Your VAT registration number, if you are VAT registered
• The date you started trading

Depending on your business type, you may also need your National Insurance number, your company registration number, your registering partner's details including their UTR and National Insurance number, or a joint venture agreement.

If you do not have a UTR yet

This is common for people who are new to self-employment. Instead of registering for CIS on its own, register as a new business for Self Assessment and choose the option for working as a subcontractor. HMRC then registers you for Self Assessment and CIS together. GOV.UK lets you check when to expect a reply.

Sole traders, partnerships and limited companies

The online service needs you to sign in. If you cannot register online, there are separate postal forms for sole traders, partnerships and limited companies. Pick the one that matches your business type. If an agent registers for you, they use the Government Gateway user ID for their agent services account.

Be careful with the details you give. HMRC warns that you could be fined for giving false information, and so could anyone who helps make a false registration.

After you register

Give each contractor the exact details from your CIS registration, including your UTR and your legal business or trading name, so they can verify you. If they cannot verify you, your pay can be affected. Keep every payment and deduction statement a contractor gives you, because HMRC may ask for evidence of your deductions. You will also need them to claim the deductions back against your tax.

Gross payment status: the third option

Some subcontractors want to be paid with nothing deducted at all. That is gross payment status. You apply using an online or postal form, and applying also registers you for CIS if you are not registered yet.

To qualify, GOV.UK says your business must do construction work (or provide labour for it) in the UK, be run through a bank account, and have paid its tax and National Insurance on time in the past. There is also a turnover test. It looks at the last 12 months and leaves out VAT and the cost of materials:

• Sole trader: £30,000
• Partnership: £30,000 for each partner, or at least £100,000 for the whole partnership
• Limited company: £30,000 for each director, or at least £100,000 for the whole company. If the company is controlled by 5 people or fewer, it needs £30,000 for each of them.

If you do not qualify yet, register for net payment status now and apply for gross status later. Not registering at all means contractors deduct 30% in the meantime.

A worked example

Here is a hypothetical case. A newly self-employed joiner is about to start work for a local building firm. He has never filed a tax return, so he has no UTR. He registers for Self Assessment as a new business and selects working as a subcontractor. Once HMRC confirms his registration, he gives the building firm his name and UTR. The firm verifies him and deducts 20% from his invoices, after leaving out VAT and any materials he paid for himself.

Six months later, he starts paying another tradesperson to help on jobs. He is now a contractor too. He registers as a new employer before that first payment, verifies his helper, and starts filing monthly CIS returns. He keeps his subcontractor registration for the work he still does for the building firm.

Where bookkeeping comes in

CIS is manageable once it is running, but it creates a lot of paperwork. Contractors need deductions worked out on the right part of each invoice, statements issued within 14 days of each tax month, and a return filed every month. Subcontractors need every statement kept and matched to what reached the bank, so the deductions can be claimed back in full.

Records that are kept up to date make both jobs easier. If bank lines are matched to invoices and statements as they happen, the monthly return becomes a check rather than a scramble. Our guides on how CIS tax works and how to claim a CIS refund cover the next steps.