The Construction Industry Scheme (CIS) is run by HM Revenue and Customs (HMRC).
Under the scheme, contractors deduct tax from subcontractors' payments and pay the tax to HMRC. HMRC tells contractors the rate of tax to deduct.
CIS tax rates
You can find the CIS tax rates on GOV.UK. Currently, most subcontractors are taxed at a rate of 20%. Subcontractors who are unregistered are taxed at 30%.
How CIS affects the CITB levy
The CITB levy is calculated on payments to:
- Employees paid through Pay As you Earn (PAYE)
- CIS subcontractors who you deduct CIS tax from (or 'pay net'). These include labour-only and supply and fit subcontractors.
Subcontractors can apply to HMRC for ‘gross payment status’ so you pay them without a deduction. The CITB levy is not applied to CIS subcontractors who you pay gross.
On your Levy Return, you need to include the amount of CIS tax you deducted from your subcontractors’ payments.
See the current levy rates
You may need to ask the person in your business responsible for making payments to subcontractors for a list of those you have deducted CIS tax from.
For more information about CIS, visit GOV.UK