CIS: Construction Industry Scheme

What Is CIS?

The Construction Industry Scheme (CIS) is an HMRC requirement for contractors who pay subcontractors for construction work. If you're a contractor hiring subbies, you need to deduct money from their payments and send it to HMRC — it goes towards their tax and National Insurance.

It's not optional. If you're paying subcontractors and you're in the construction industry, you need to be registered for CIS and making the right deductions. A.X.E.L handles the maths, the paperwork, and the HMRC reporting for you.

CIS Deduction Rates

There are three rates depending on the subcontractor's registration status:

• Unregistered — 30% — they haven't registered with HMRC for CIS. You deduct 30% from their labour payments.
• Registered — 20% — they're registered for CIS. Standard deduction of 20%.
• Gross — 0% — they've got gross payment status with HMRC. No deductions — you pay them the full amount.

The deduction only applies to the labour portion of the payment — not materials. If a subbie charges you £1,000 for labour and £500 for materials, you only deduct from the £1,000.

Setting Up a Subcontractor with CIS

When you add or edit a subcontractor, you'll see the CIS section in their profile:

1. Go to Subcontractors from the sidebar
2. Tap Add Subcontractor (or open an existing one and hit Edit)
3. Scroll to the CIS Details section
4. Select their CIS Status: Unregistered (30%), Registered (20%), or Gross (0%)
5. Enter their UTR Number (Unique Taxpayer Reference) — this is the 10-digit number HMRC gives them
6. Enter their National Insurance Number (NINO) — needed for HMRC verification
7. Hit Save

If you're not sure what their CIS status is, set them as Unregistered (30%) to be safe — you can always verify with HMRC and update it later.

Verifying Subcontractors with HMRC

Not sure if your subbie is registered? A.X.E.L can check with HMRC directly.

1. Open the subcontractor's profile
2. Tap the Verify with HMRC button
3. A.X.E.L checks HMRC's records using their UTR and NINO
4. The deduction rate updates automatically based on what HMRC says

Important: You need to connect your HMRC account first before verification will work. See the Connecting to HMRC section below.

HMRC requires you to verify every subcontractor before you pay them for the first time each tax year, or if you haven't paid them in the current tax year. A.X.E.L makes this a one-tap job instead of messing about on the HMRC website.

How CIS Deductions Work on Jobs

When you assign a CIS-registered subcontractor to a job, A.X.E.L handles the deductions automatically:

• You set the subcontractor's total cost on the job (labour + materials)
• A.X.E.L splits out the labour and materials portions
• The CIS deduction is calculated on the labour portion only
• You see the gross amount, the deduction, and the net amount to pay

Example: You assign a plasterer (CIS Registered, 20%) to a job at £800 labour + £200 materials.
CIS deduction: 20% of £800 = £160
You pay the subbie: £840 (£800 − £160 + £200)
You send £160 to HMRC on their behalf.

The deduction amount is tracked against the job so your profit calculations stay accurate.

CIS Monthly Returns

Every month, you need to tell HMRC about all the payments you've made to subcontractors and the deductions you've taken. A.X.E.L generates this return for you.

1. Go to Reports → CIS (or navigate to /reports/cis)
2. Select the tax month you want to report on
3. A.X.E.L pulls together all subcontractor payments for that period
4. Review the summary — total payments, total deductions, per subcontractor breakdown
5. You can export as CSV for your own records or your accountant
6. If you've connected HMRC, tap Submit to HMRC to file the return directly

CIS returns are due by the 19th of each month for the previous tax month. Miss the deadline and HMRC will fine you, so set yourself a reminder or let A.X.E.L nudge you.

Connecting to HMRC

To verify subcontractors and submit CIS returns directly from A.X.E.L, you need to connect your HMRC account:

1. Go to Settings → Integrations
2. Find HMRC and tap Connect
3. You'll be redirected to HMRC's website to sign in with your Government Gateway credentials
4. Grant A.X.E.L permission to access your CIS data
5. You'll be redirected back to A.X.E.L — done

A.X.E.L only requests the permissions it needs: reading and submitting CIS deductions. It can't access your personal tax, bank details, or anything else.

The connection stays active until you disconnect it. If HMRC asks you to re-authorise (they do this occasionally), you'll see a notification in A.X.E.L prompting you to reconnect.

Tips

• Verify subbies early — do it when you add them, not when you're scrambling to file the return
• Keep UTR and NINO up to date — wrong details mean failed verifications
• Separate labour and materials — CIS only applies to labour, so make sure you're splitting costs properly on each job
• File on time — the 19th of each month. Late returns mean automatic penalties from HMRC
• Talk to your accountant — A.X.E.L does the heavy lifting, but if you're unsure about CIS obligations, get professional advice