{"id":5107,"date":"2024-07-03T14:27:12","date_gmt":"2024-07-03T13:27:12","guid":{"rendered":"https:\/\/well-tax.com\/?p=5107"},"modified":"2026-08-24T13:59:41","modified_gmt":"2026-08-24T12:59:41","slug":"guida-pratica-al-programma-cis-2026-per-il-settore-edile","status":"publish","type":"post","link":"https:\/\/well-tax.com\/it\/construction-industry-scheme-cis-2026-practical-guide\/","title":{"rendered":"Construction Industry Scheme (CIS): Guida pratica 2026"},"content":{"rendered":"\n
\"Construction<\/figure>\n\n\n\n

The Construction Industry Scheme is a UK tax regime requiring contractors to check, deduct and report tax on certain payments to subcontractors carrying out construction work. For 2026, contractors and subcontractors should carefully review their CIS position, particularly in light of HMRC\u2019s updated CIS 340 guidance and the new rules from 6 April 2026 on nil returns and payments to subcontractors that are local authorities or public bodies.<\/p>\n\n\n\n

Key Aspects of Construction Industry Scheme<\/h2>\n\n\n\n

The Construction Industry Scheme applies to contractors and subcontractors involved in construction operations in the UK. Its purpose is to ensure that tax is accounted for at source where subcontractors are paid for construction work.<\/p>\n\n\n\n

Under CIS, a contractor must decide whether a payment falls within the scheme, verify the subcontractor where required, apply the correct deduction rate and report the payment to HMRC. The subcontractor then receives a payment and deduction statement, which supports their claim for tax already deducted.<\/p>\n\n\n\n

The standard CIS deduction rates are:<\/p>\n\n\n\n

Subcontractor CIS status<\/td>CIS deduction rate<\/td>Practical impact<\/td><\/tr><\/thead>
Registered subcontractor paid under deduction<\/td>20%<\/td>Contractor deducts tax from the labour element before payment<\/td><\/tr>
Unregistered or unmatched subcontractor<\/td>30%<\/td>Higher deduction applies, often creating a cash-flow disadvantage<\/td><\/tr>
Gross payment status approved by HMRC<\/td>0%<\/td>Subcontractor is paid without CIS deductions<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

WellTax can assist contractors and subcontractors in reviewing whether their current CIS process applies the correct rates, especially where payments include labour, materials, VAT and project expenses.<\/p>\n\n\n\n

Construction Industry Scheme registration requirements<\/h2>\n\n\n\n

Contractors are required to register under the Construction Industry Scheme if they pay subcontractors for construction work. Companies that operate as both contractors and subcontractors may need to register in both capacities.<\/p>\n\n\n\n

Unlike contractors, subcontractors are not legally required to register under CIS. However, a subcontractor that chooses not to register, or whose details cannot be verified by HMRC, may suffer the higher deduction rate of 30%. For this reason, CIS registration is usually commercially important for subcontractors.<\/p>\n\n\n\n

Contractors not primarily involved in construction may still need to register as deemed contractors if their construction expenditure exceeds \u00a33 million in the previous 12-month period. HMRC\u2019s guidance confirms that businesses must monitor construction spend regularly, and once the \u00a33 million threshold is exceeded, relevant payments within CIS must be reported.<\/p>\n\n\n\n

Once HMRC accepts a contractor\u2019s registration, HMRC provides reference details, including the PAYE Employer Reference and Accounts Office Reference. For subcontractors, the Unique Taxpayer Reference, or UTR, is a key reference used for registration and verification.<\/p>\n\n\n\n

Where an overseas business carries out construction work in the UK, CIS may still apply. For wider UK project considerations, see WellTax\u2019s article on tax considerations for foreign entities operating a building site in the UK<\/a>.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Subcontractor verification under CIS<\/h2>\n\n\n\n

Before making a payment to a subcontractor for work within CIS, a contractor must check whether the subcontractor needs to be verified with HMRC. Verification is the process through which HMRC confirms the deduction rate that should apply.<\/p>\n\n\n\n

A contractor may not need to verify a subcontractor again if that subcontractor has already been included on a CIS return in the current tax year or the previous two tax years. If the subcontractor is new, or has not been included within that period, the contractor should verify the subcontractor before making payment.<\/p>\n\n\n\n

Information needed for verification<\/h3>\n\n\n\n

Before processing payment, the contractor should make sure it holds the correct information needed to verify the subcontractor with HMRC. The details required will depend on the contractor\u2019s own registration position and the subcontractor\u2019s legal structure.<\/p>\n\n\n\n

For a sole trader subcontractor, HMRC may require:<\/p>\n\n\n\n

    \n
  • Name.<\/li>\n\n\n\n
  • UK Taxpayer Reference number (UTR).<\/li>\n\n\n\n
  • National Insurance number.<\/li>\n<\/ul>\n\n\n\n

    For a company subcontractor, HMRC may require:<\/p>\n\n\n\n

      \n
    • Business name.<\/li>\n\n\n\n
    • Business UK Taxpayer Reference number (UTR).<\/li>\n\n\n\n
    • Business registration number.<\/li>\n<\/ul>\n\n\n\n

      For a partnership, HMRC may require details of the firm and partner, including UTR or company registration details depending on the partner\u2019s status.<\/p>\n\n\n\n

      Verification result<\/h3>\n\n\n\n

      Once the verification is completed, HMRC will confirm whether the subcontractor should be paid:<\/p>\n\n\n\n

        \n
      • Gross, with no CIS deduction.<\/li>\n\n\n\n
      • Net of the standard deduction rate.<\/li>\n\n\n\n
      • Net of the higher deduction rate because HMRC cannot verify the subcontractor or has no registration record.<\/li>\n<\/ul>\n\n\n\n

        HMRC will also provide a verification reference number. This is particularly important where the higher deduction rate applies, as it must be recorded and shown on relevant payment and deduction statements.<\/p>\n\n\n\n

        Contractor responsibilities under CIS<\/h2>\n\n\n\n

        Contractors have continuing monthly obligations under the Construction Industry Scheme. These obligations apply after registration and continue for each relevant CIS reporting period.<\/p>\n\n\n\n

        The CIS reporting period runs from the 6th of one month to the 5th of the next. The contractor must submit the monthly return to HMRC by the 19th of the following month. For example, the return for the period 6 May to 5 June is due by 19 June.<\/p>\n\n\n\n

        The monthly return must report payments made to subcontractors and deductions made from those payments. As a result of these obligations, contractors make two separate payments: one to the subcontractor, who uses it to partially settle their invoice, and another payment to HMRC, also due by the 19th of the following month. Contractors must also provide payment and deduction statements to subcontractors where deductions have been made.<\/p>\n\n\n\n

        Failure to comply with CIS can lead to penalties, interest and contractor exposure for under-deducted tax. A practical CIS process should therefore be built into supplier onboarding, invoice approval and payment release, rather than left until the return deadline.<\/p>\n\n\n\t\t

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