TheConstructionIndustryScheme

The Construction Industry Scheme requires contractors to deduct money from payments to subcontractors and pass it to HMRC as an advance payment towards the subcontractor's tax and National Insurance. It applies across most construction-related work and brings registration, verification and reporting obligations for contractors.

Subcontractors can be paid under different deduction rates depending on their registration status, and getting registration and verification right affects cash flow significantly. Both contractors and subcontractors need to understand their obligations under the scheme, as penalties can apply for incorrect returns or failure to register appropriately.