Construction Industry Scheme - CIS (Scotland)
This fact sheet covers Scotland. We also have a version for England & Wales if you need it.
This information sheet is for sole traders and partnerships who work in construction on the Construction Industry Scheme (CIS).
CIS sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry. The scheme applies mainly to contractors and subcontractors in mainstream construction work.
Use this fact sheet to:
find out how you might be paid; and
see what sort of records you should keep.
Payments under CIS - gross or under deduction
Under CIS, there are two ways in which you might be paid.
Gross.
Payment under deduction.
CIS gross payments
If you are registered for gross payment, the contractor pays you in full without any deduction. So you'll need to pay tax and National Insurance contributions (NICs) on this amount later through your tax return to HM Revenue & Customs (HMRC).
CIS payment under deduction
If you are registered for payment under deduction, the contractor takes off an amount (currently 20%) before they pay you and they must pay this to HMRC. You'll still need to pay tax and NICs on your payments later through your tax return, but HMRC will take off the amount that has already been paid by your contractor off this bill.
The 20% deduction will normally take off more tax you than you actually need to pay. This means you may be entitled to a tax rebate at the end of the year. To get this you must put your tax returns in on time and keep proper records.
Keeping records
If you are registered under the CIS scheme, you should still keep records to help you do your tax returns. You should keep things like:
cashbooks;
invoices;
mileage records;
bank statements;
receipts for purchases; and
CIS vouchers.
You can also claim certain expenses on your tax return. These include:
accountancy, legal and other professional fees;
car, van and travel expenses; and
stationery and other office costs (mobile, internet, email costs).
Using an accountant
It is always a good idea to employ an accountant or bookkeeper to do your tax returns. They will be able to offer advice about what you can include and what you can claim as expenses on your tax return.