General information on CIS

CIS is a system set up by tax authorities to impose rules on how main contractors manage payments for sub-contractors, as well as corresponding deductible tax and the monthly declarations within the building industry and other industries.

Contractors are required to register to the CIS system, otherwise they are obliged to deduct 30% of tax from the total wage until they do so. Once the company is registered, this changes to 20%. (The deducted 20% or 30% tax is credited at the end of the fiscal year, and in some cases it can also be reimbursed).

The CIS system covers the following areas in the UK:

  •     landscaping, preparation
  •     conversion, modification
  •     demolition, removal, disassembly
  •     building, construction, implementation and other construction works
  •     decoration, painting, interior design
  •     demolition of buildings or other constructions

The CIS system does not apply to construction works carried out outside the United Kingdom, however, in case a foreign company operates in the UK, it does need to register.

(The territory of United Kingdom covers an area of sea too, 12 miles away from the coast).

As self-employed, you may be on both sides of the CIS system. It is possible that you work for another company (main contractor) as a subcontractor, but at the same time you have subcontracted entrepreneurs working for you, hence you become a main contractor.