What is the CIS Scheme?

The CIS scheme (Construction Industry Scheme), or CIS as it’s simply known, is a UK tax scheme that applies to payments made by contractors to subcontractors that work within the construction industry. Contractors generally deduct money from a subcontractor’s payments and pass it to HM Revenue & Customs (HMRC) under CIS. These deductions are usually treated as advance payments towards the subcontractor’s tax and National Insurance.

CIS mainly applies to businesses and individuals working in the construction industry, including builders, plumbers, electricians, carpenters, bricklayers, painters and decorators, labourers and other construction subcontractors. A contractor is generally responsible for registering for CIS and checking the status of subcontractors they hire.

CIS deductions work in the following way:

For registered subcontractors, the contractor will typically deduct 20% from payments after taking account of allowable deductions. If a subcontractor isn’t registered with CIS, the deduction can be 30%. Those operating as gross payment status subcontractors can receive payments without CIS deductions, as long as they meet HMRC’s requirements.

However, being paid through CIS does not automatically mean that you’re an employee. CIS is a tax arrangement for construction work and is commonly used when genuine self-employed subcontractors work for contractors. Employment status depends on the working relationship and not simply because someone is paid under CIS.

If you’re a CIS subcontractor, you can potentially get a mortgage. Some lenders will have specific criteria for CIS workers and, therefore, income assessment will be done differently from a traditional employee. A lender will look at documents like CIS payslips, bank statements, tax information, and evidence of your contracting history when assessing affordability.

If you’re unsure, or need help and support when applying for a mortgage while being a CIS contractor, then employ the help of an experienced and knowledgeable mortgage broker, like the ones we have here at View Finance.