Yes. If you stop trading or no longer use subcontractors, you must inform HMRC to deregister. You should also notify HMRC of any changes affecting your registration, such as: a change of address, changes to business structure, the death of a contractor, or ceasing to trade or stopping the use of subcontractors. If the change is temporary, you may submit an inactivity request instead. Monthly CIS returns must continue until HMRC confirms your deregistration.
What is the Construction Industry Scheme (CIS)?
Understanding CIS requirements and compliance for contractors and subcontractors
The Construction Industry Scheme (CIS) requires contractors to deduct tax and National Insurance contributions from payments made to subcontractors. These deductions spread the subcontractor's tax liability throughout the year, instead of requiring a large payment at the end of the tax period.
CIS affects both contractors and subcontractors:
Contractors must register for CIS if they hire subcontractors for any part of their work or if their construction spending exceeded £3 million in the previous year.
Subcontractors are not required to register, but doing so is beneficial. Registered subcontractors are taxed at 20%, while unregistered subcontractors are taxed at 30%.
CIS applies exclusively to subcontractor payments. Payments to employees are handled through the PAYE system.
Construction Work Covered by CIS
CIS applies to most construction activities, including building permanent or temporary structures and civil engineering projects such as roads and bridges.
For CIS purposes, construction work includes:
Site preparation (e.g., foundations, access routes)
Demolition and dismantling
General building work
Alterations, repairs, and decorating
Installation of heating, lighting, power, water, or ventilation systems
Post-construction cleaning of buildings
Work Not Covered by CIS
You do not need to register for CIS if your work only involves:
Architecture or surveying
Scaffolding hire (without labour)
Carpet fitting
Manufacturing construction materials, including plant or machinery
Delivering materials
Non-construction activities on site (e.g., running a canteen or site facilities)
Registering for CIS
If You Are a Contractor:
Register for CIS before hiring subcontractors.
Register as a new employer with HMRC and obtain a PAYE reference.
Ensure you are correctly classifying workers as subcontractors or employees to avoid penalties.
Deduct the appropriate tax from subcontractor payments and submit monthly CIS returns.
Keep accurate CIS records to avoid compliance issues.
If You Are a Subcontractor:
You can register online using your Government Gateway ID, password, and Unique Tax Reference (UTR).
New applicants can register for Self Assessment and CIS at the same time.
If you do not register, tax will be deducted at 30% instead of 20%.