CIS for Electricians — The 2026 Guide

The Construction Industry Scheme (CIS) is HMRC’s system for collecting tax at source from construction sub-contractors. The contractor deducts tax from the labour part of each payment and passes it to HMRC, and the deduction counts towards your own tax bill at the end of the year.

CIS covers you if you work as a sub-contractor for a contractor on construction work in the UK, which includes most electrical installation work on building sites, and you are not employed (PAYE) by that contractor. Jobs for a homeowner directly are not CIS work. A day’s sub-contract work for another electrical firm on a commercial job is.

Register as a sub-contractor with HMRC online. You need your Unique Taxpayer Reference (UTR), National Insurance number and business details. Registration is free. Unregistered sub-contractors have 30% deducted instead of 20%.

With Gross Payment Status you are paid in full and settle your tax through self-assessment. You must pass three tests: the business test (you do construction work in the UK and run the business through a bank account), the turnover test (at least £30,000 net construction turnover in the last 12 months as a sole trader, excluding VAT and materials; for partnerships and companies £30,000 per partner or director, or £100,000 overall) and the compliance test (returns filed and tax, National Insurance and, since April 2024, VAT paid on time). HMRC reviews compliance every year and can remove the status, and from April 2026 it can act faster where a business is connected to supply-chain fraud.

If you pay sub-contractors for construction work, you are a contractor under CIS. Before paying a new sub-contractor you verify them with HMRC, which tells you whether to deduct 20%, 30% or nothing. You file a monthly return by the 19th of each month covering the tax month to the 5th, and give each sub-contractor a payment and deduction statement. A late return attracts a £100 penalty, rising the longer it is late.

Your CIS deductions go on your self-assessment return as tax already paid. If £8,000 has been deducted and your tax and Class 4 National Insurance come to £6,000, HMRC refunds the £2,000 difference. Keep every payment and deduction statement from your contractors: they are your evidence of what was deducted.

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