Construction Industry Scheme (CIS)
HMRC scheme where contractors deduct money from subcontractor payments — 20%, 30% or 0% based on the subcontractor’s verification status — and pass it to HMRC as advance tax payments.
At a glance
Compliance- Why it matters
- UK statutory
- Related
- 3 terms
- Walkthroughs
- 3 guides
- Watch out
- Common misconception below
Plain English. UK spelling. No marketing filler.
Why this matters
Any UK business in construction (or that spends more than £3 million a year on construction even if it isn’t a builder) must register as a CIS contractor. Every subcontractor payment then needs verification with HMRC, deduction at the right rate on labour, a monthly CIS300 return by the 19th, and a monthly statement of deduction to each subcontractor. Penalties for late or wrong CIS300 returns escalate quickly — £100 on day one, climbing to £3,000 after a year.
How YionStack handles it
The YionStack accounting module handles the whole CIS flow inside the bill workflow. Mark a supplier as a subcontractor, verify them through the HMRC CIS API (the response — Gross, Standard 20%, Higher 30%, Unmatched — stores against the supplier), then enter bills with separate labour and materials lines. The deduction applies on the labour line only at the verified rate. On the 6th of each month, the CIS300 workspace assembles the previous tax month’s returns from the bills, ready for review and submission through the HMRC API. Subcontractor deduction statements generate per supplier and email automatically once the return is filed.
Common misconception
CIS and VAT reverse charge often apply together
Most subcontractor bills are now subject to both CIS (on the labour value) and the VAT domestic reverse charge (the customer accounts for the VAT, not the supplier). Both apply on the same bill at the same time. YionStack applies both correctly when the bill is on a verified CIS-registered supplier and the customer is also CIS-registered.
Related terms
Walk me through it
The whole UK Business Operating System.
VAT, PAYE, Companies House, CIS, payroll, CRM and the AI that watches them — in one place built for UK businesses.