CIS Overview

The Construction Industry Scheme (CIS) is a UK tax scheme that requires contractors in the construction industry to deduct tax from payments made to subcontractors and pay it to HMRC.

Who Does CIS Apply To?

Contractors — Businesses that pay subcontractors for construction work. You're a contractor if you:

Spend more than £3 million a year on construction in a 3-year period, OR
Are in the construction industry and pay subcontractors

Subcontractors — Individuals or businesses that carry out construction work for a contractor. They are NOT employees — they handle their own tax affairs. The CIS deduction is an advance payment of their tax liability.

How CIS Works

Verify subcontractors — Before paying a subcontractor for the first time, verify them with HMRC to find out the correct deduction rate
Make deductions — When you pay a subcontractor, deduct tax from the labour portion of their payment (not materials)
File monthly returns — Submit a CIS return to HMRC every month by the 19th, detailing all payments and deductions
Provide statements — Give each subcontractor a payment and deduction statement within 14 days of the end of each tax month
Pay HMRC — Pay the deductions to HMRC by the 19th of each month (or 22nd for electronic payments)

Deduction Rates

Status	Rate	Meaning
Gross (Registered for Gross Payment)	0%	Subcontractor receives full payment, no deduction
Net (Registered)	20%	Standard deduction rate for registered subcontractors
Higher Rate (Unregistered)	30%	Applied when a subcontractor is not registered with HMRC for CIS

What Gets Deducted?

CIS deductions apply to the labour cost only. Materials supplied by the subcontractor are excluded from the deduction calculation:

Total Payment = Labour + Materials Deduction = Labour x Deduction Rate Net Payment = Total Payment - Deduction

Key Deadlines

Action	Deadline
Monthly CIS return	19th of following month
Payment to HMRC	19th (postal) or 22nd (electronic)
Statement to subcontractor	Within 14 days of tax month end

CIS Tax Months

CIS operates on tax months, which run from the 6th of one month to the 5th of the next:

Month 1: 6 April - 5 May
Month 2: 6 May - 5 June
...and so on through to Month 12: 6 March - 5 April

dynamik.app CIS Features

dynamik.app supports the full CIS workflow:

Mark suppliers as CIS subcontractors with their UTR and tax treatment
Automatically calculate CIS deductions on bills
Create and submit monthly CIS returns to HMRC
Import deductions from paid bills
Generate payment and deduction statements as PDFs