You will usually need to make Construction Industry Scheme (CIS) deductions from payments you make to subcontractors. You must ‘verify’ subcontractors so that HM Revenue and Customs (HMRC) can tell you the correct rate of CIS deduction.
Verify your subcontractors
You need to verify subcontractors if you haven’t included them on a CIS return in the current or past 2 tax years.
When you verify your subcontractors, HMRC will tell you whether or not the subcontractor is registered under CIS. They will also tell you what rate of CIS deduction to use or if you can pay them without making deductions.
You can verify subcontractors with:
You can also call the CIS helpline.
Telephone: 0300 200 3210
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Find out about call charges
To verify your subcontractors, you’ll need:
- the name of your business or organisation
- your Unique Taxpayer Reference (UTR)
- the reference number for your HMRC accounts office
- your HMRC employer reference
You will also need your subcontractors’:
- name or business name
- National Insurance number if they’re a sole trader
- company registration number if they’re a limited company
Verifying large numbers of subcontractors
You can verify subcontractors and file CIS data using the Electronic Data Interchange (EDI) system.
This allows you to transfer large amounts of information quickly and easily (you don’t have to have a certain number of subcontractors to use this system).
There’s more information about this on the HMRC website.
CIS deductions and payments to subcontractors
HMRC will tell you the correct rate of CIS deduction when you verify the subcontractor. The rates are:
- 20% CIS deductions for registered subcontractors
- 30% CIS deductions for unregistered subcontractors
- no deduction in some cases, ie pay the gross amount
You only need to make CIS deductions from payments to subcontractors - not salaried employees.
You can pay your subcontractors directly or through a third party if they ask you to.
You must check your subcontractors’ employment status before paying them for the first time.
You must give subcontractors a payment and deduction statement if you make CIS deductions from their payments.