A subcontractor registers for the Construction Industry Scheme with HMRC, usually online once it has a Unique Taxpayer Reference. Registration means contractors deduct 20% from payments instead of 30%, so an unregistered worker loses an extra tenth of the labour element of every payment until the year end. Registration is needed only once for each business, but HMRC must be told when details change, and a change of structure such as incorporation needs a new registration.

Who should register?

GOV.UK says you should register if you work for a contractor and you are a sole trader, the owner of a limited company, or a partner in a partnership or trust. Employees do not register. If you also pay others to do construction work, you must register as both a subcontractor and a contractor. Subcontractors based abroad who work in the UK should still register.

Strictly, nothing forces a subcontractor to register. The cost of not doing so is the higher rate of deduction, which is why HMRC’s guidance at CISR42010 describes delays in registering as the difference between 30% and the standard 20%.

Why does an unregistered subcontractor suffer 30%?

Section 61 of the Finance Act 2004 lets the Treasury set the deduction rate, capped at the basic rate for registered subcontractors and the higher rate for those not registered. Article 2 of SI 2007/46 fixes those rates at 20% and 30%. A contractor is told to use 30% whenever HMRC cannot match the person to a CIS registration, whether because they never registered or because the details given do not match HMRC’s records (CISR51060).

The extra 10% is not lost. It is still an advance payment of tax, credited on the sole trader’s or partner’s return or set against a company’s payroll liabilities. But it ties up cash, and the contractor cannot simply refund it once you register. When HMRC tells a contractor about a change from the higher rate, form CIS316B instructs it not to refund deductions already made (CISR72100). The full rate rules are in CIS deduction rates explained.

What do you need before you register?

GOV.UK lists the information required:

  • your legal business name, and any trading name;
  • the Unique Taxpayer Reference for the business;
  • your VAT registration number, if you have one;
  • the date you started trading;
  • depending on your circumstances, your National Insurance number, company registration number, the registering partner’s details or a joint venture agreement.

HMRC’s manual adds the prerequisites behind those items. Sole traders and partners must have a live Self Assessment record as self employed, though both can be set up at the same time, and companies need a live Corporation Tax record (CISR42010). Individuals also need a verifiable UK National Insurance number; anyone without one is directed to the Department for Work and Pensions, which may require an evidence of identity interview (CISR42050 and CISR42150).

How do you register?

  1. If you already have a UTR, use HMRC’s online service, signing in with Government Gateway details or creating them. Online registration gives net payment status, meaning payment under deduction at 20%. Agents use the user ID for their agent services account.
  2. If you do not have a UTR, register as a new business for Self Assessment and choose “working as a subcontractor” when prompted. GOV.UK says this registers you for Self Assessment and CIS at the same time. The general steps are in how to register as self employed.
  3. If you cannot register online, use the postal form for your type of business: CIS301 for sole traders, CIS304 for partnerships and trusts, and CIS305 for companies (CISR41010). HMRC does not accept registration requests made by letter (CISR42200), and its CIS helpline no longer completes registrations (CISR42010).

If you want to be paid without deductions, applying for gross payment status also registers you for CIS if you are not already registered.

Be accurate. Under section 72 of the Finance Act 2004, anyone who knowingly or recklessly gives false information to become registered faces a penalty of up to £3,000, and the same applies to a person with influence or control over the applicant who supplies or encourages it.

What happens once you are registered?

HMRC confirms your status on form CIS313. Give each contractor exactly the details you registered with, including your UTR and legal or trading name, because they use them to verify you, and if they cannot verify you, they must deduct 30%. If a contractor has been deducting at 30% because you were unregistered, HMRC can send it form CIS316B confirming the new rate; the new rate applies to payments made after the contractor verifies you again or receives that form (CISR72100). The verification process from the contractor’s side is described in how to verify a CIS subcontractor.

Keep every monthly payment and deduction statement. A sole trader or partner claims the deductions on the Self Assessment return; a company claims them through its Employer Payment Summary, as explained in reclaiming CIS deductions as a limited company.

How do you update your details with HMRC?

GOV.UK says changes are reported by calling the CIS helpline. Some changes end the old registration:

  • changing from sole trader to partnership;
  • leaving a partnership or company to become a sole trader;
  • creating a company or changing your business into one.

In those cases you usually have to register again, because a registration cannot be transferred between business structures, and gross payment status must be applied for again. You must also tell HMRC if you change your trading name, change your business, private or registered office address, or stop trading. A company with gross payment status that takes on new shareholders must tell HMRC within 30 days or risk losing that status.

HMRC’s internal guidance says a change of a sole trader’s name must be requested in writing, unless it corrects a spelling (CISR41020). For companies, name changes are made on the Corporation Tax record and then flow through to CIS (CISR41040). Whatever you change, make sure contractors have the same details HMRC holds, or their next verification may fail.

What does staying unregistered cost?

Illustration only. Dan is a self employed labourer with no materials costs who invoices £2,000 a month.

Registered (20%) Unregistered (30%)
Deduction each month £400 £600
Paid to Dan each month £1,600 £1,400
Deductions over 12 months £4,800 £7,200

The extra £2,400 is credited when his return is processed, but he goes without it for months, and if his tax bill is lower than the deductions he waits for a repayment.

What mistakes cause problems?

  • Giving a contractor a trading name or UTR that differs from the registration, which produces an unmatched verification and 30% deductions.
  • Offering a temporary National Insurance number; GOV.UK says contractors cannot verify numbers starting with TN or two digits.
  • Incorporating and carrying on under the old sole trader registration instead of registering the company.
  • Expecting the contractor to repay the extra 10% after registering, instead of claiming it through the return or payroll.
  • Losing payment and deduction statements; ask the contractor for duplicates, or write to HMRC if the contractor has gone out of business.

For how the scheme fits together, see how the Construction Industry Scheme works.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.