Under the Construction Industry Scheme (CIS) contractors are required to register with HMRC and subcontractors should also register with HMRC.
When contractors hire subcontractors such as builders, plumbers, roofers, gas, electrical, demolition, road surfacers etc. they are required to withhold some subcontractor pay in lieu of corporation taxes, income taxes and National Insurance.
The Construction Industry Scheme (CIS) deduction rates are:
These deductions are paid to HMRC - they count as advance payments towards the subcontractor’s tax and National Insurance bill.