How to register as a CIS contractor

You must register if either of these is true:

• your business does construction work and you pay subbies for construction work. HMRC calls you a mainstream contractor. Builders, labour agencies, gang leaders and property developers all count.
• your business doesn't do construction work, but you have spent more than £3 million on construction in a 12-month period. HMRC calls you a deemed contractor.

It makes no difference whether you are a sole trader, a partnership or a limited company. Private householders paying for work on their home are not contractors.

Register when you are about to take on and pay your first subbie, whether HMRC will have you pay them gross or with a deduction.

If your business is outside construction, keep an eye on what you spend on construction work. Once it goes over £3 million in any 12 months, you are a deemed contractor. You stay one until you can show HMRC you spent less than £3 million in the previous 12 months.

A deemed contractor doesn't apply CIS to work on property it uses for its own business and doesn't sell or rent out. If none of your construction payments fall under CIS, you don't need to register.

There is no separate CIS form for contractors. You follow HMRC's process for registering as an employer, which covers firms using subbies for construction work as well as firms with staff. HMRC sets up a contractor scheme for you, and a PAYE scheme for staff if you ask for one.

1. Register as an employer. Most limited companies with 1 to 9 directors can do it online. You can't register more than 2 months before you start paying people.
2. Wait for HMRC's letter. It has what you need to start as a CIS contractor, including your employer PAYE reference and your accounts office reference.
3. Keep the letter. You need its references to verify subbies and file returns.

If you get stuck, HMRC points you to its new employer helpline or the CIS helpline. If your business is based outside the UK, there is a different way to register.

Plenty of firms pay subbies and get paid under CIS themselves. When you pay, you follow the contractor rules; when you get paid, the subcontractor rules. Registering as a contractor doesn't register you as a subcontractor. That is a separate registration, done online with your UTR or when you register for Self Assessment, and without it the firms paying you deduct at the higher rate.

• Verify each new subbie with HMRC before you pay them, so you know whether to deduct 0%, 20% or 30%. See how to verify a CIS subcontractor.
• File a CIS300 return every month, due by the 19th. Every month's date is in CIS deadlines.
• In a month when you pay no subbies, file a nil return or tell HMRC you are inactive. See CIS nil returns.
• Give every subbie you deducted from a statement of what you paid and deducted, by the 19th. See CIS statements.

To verify subbies and file returns, through HMRC's service or software, have these to hand:

• your Unique Taxpayer Reference (UTR), 10 digits, on your tax returns and other HMRC letters. A limited company uses the company's UTR, not a director's
• your accounts office reference, 13 characters, like 123PA00012345, on HMRC's registration letter or in your HMRC online account if you file PAYE online
• your employer PAYE reference: your tax office number and reference, like 123/AB45678, on HMRC's registration letter