CIS registration
CIS registration is what drops your deduction rate from 30% to 20%. Subcontractors are not legally forced to register, but not registering costs you ten percentage points of every labour payment until you do.
Updated 10 September 2026 · Tax year 2026/27
Which registration you need #
| You are | Register as | Compulsory? |
|---|---|---|
| Paid by a contractor for construction work | Subcontractor | No, but 30% applies if you do not |
| Paying subcontractors for construction work | Contractor | Yes |
| Both | Both, separately | Contractor side is compulsory |
The distinction that catches people out is that these are two separate registrations. A subcontractor who takes on their own subcontractor becomes a contractor too, and must register on that side as well.
What CIS registration actually changes #
Registration does not stop deductions. It changes the rate.
| Labour on the invoice | Unregistered, 30% | Registered, 20% | You keep |
|---|---|---|---|
| £1,000 | £300 | £200 | £100 more |
| £2,000 | £600 | £400 | £200 more |
| £5,000 | £1,500 | £1,000 | £500 more |
The extra 10% is not lost permanently. It is credited against your tax bill and comes back through Self Assessment. But it sits with HMRC for up to a year first, which is a cash flow problem rather than a tax problem. See the difference on your own invoice.
What you need before you start #
- Your Unique Taxpayer Reference, the ten-digit number issued for Self Assessment
- Your National Insurance number if you are a sole trader
- Your company registration number and Corporation Tax reference if you are a limited company
- Your VAT registration number if you are VAT registered
- Your legal business name, plus any trading name if different
- The date you started trading
- A Government Gateway user ID and password
If you do not have a Unique Taxpayer Reference yet #
This is the usual sticking point for people starting out. You cannot register for CIS without one, and you get one by registering for Self Assessment.
Register for Self Assessment as self-employed and select the option indicating you will be working as a subcontractor in construction. That sets up Self Assessment and CIS together, so you are not doing it twice.
Registering as a contractor is different #
Contractor registration is compulsory before you make your first payment to a subcontractor, and it carries ongoing duties that subcontractor registration does not:
- Verify every new subcontractor with HMRC before paying them
- Deduct at the rate HMRC gives you
- File a monthly CIS return, including nil returns
- Pay the deductions over to HMRC
- Issue a payment and deduction statement to each subcontractor
Contractor registration goes through the PAYE system, so if you do not already have a PAYE scheme you will be setting one up as part of it.
After you register #
Registration alone does not change your rate. The contractor has to verify you with HMRC, and HMRC's response is what sets the rate they apply. Until that verification happens, an existing contractor may keep deducting at the old rate.
If you have just registered, tell your contractors so they re-verify you. It is not automatic and nobody will do it on your behalf.
It is not backdated #
Payments already made at 30% stay at 30%. Registering changes future payments only. The over-deduction is reclaimed the normal way, through your tax return at the end of the year. How the refund works.
Common mistakes #
- Details that do not match HMRC's records. A slightly different trading name or a mistyped reference means verification fails and 30% applies. Use exactly what HMRC holds.
- Assuming registration is automatic once self-employed. Self Assessment and CIS are separate registrations unless you selected the subcontractor option.
- Forgetting the contractor side. The moment you pay someone else for construction work, you need contractor registration too.
- Not telling contractors you have registered. Without re-verification the old rate continues.
Next #
Once registered at 20%, the next step up is gross payment status, which removes the deduction entirely.
Common questions #
Do subcontractors have to register for CIS?
Not legally, but the deduction rate is 30% instead of 20% until you do. On £2,000 of labour that is £200 held back on every invoice.
What do I need to register for CIS?
Your Unique Taxpayer Reference, your National Insurance number if a sole trader or company details if a limited company, your VAT number if registered, your business name and trading start date, and a Government Gateway login.
Does CIS registration apply retrospectively?
No. Payments already made at 30% stay at 30%. Registration changes future payments only, and the over-deduction is reclaimed through your Self Assessment return.