Who must register as a CIS contractor
In the Construction Industry Scheme, "contractor" covers two distinct groups. The first is any business that is in the construction trade and pays subcontractors for construction work. The second is any business that is not in the construction trade but spends more than £3 million on construction in a rolling 12-month period.
The first group has a simple trigger: the moment you intend to pay a subcontractor for construction work, you must register. There is no minimum payment value below which the obligation disappears. A sole trader who hires a labourer for a single day on a domestic job must register before making that payment if the work falls within CIS operations. The obligation arises before the payment, not after it.
The second group, the deemed contractor, often comes as a surprise to businesses that do not think of themselves as being in construction. A property developer, a retail chain fitting out multiple locations, a housing association refurbishing stock, or a facilities management business commissioning maintenance work can each cross the £3 million threshold in a 12-month period and become a deemed contractor. The GOV.UK guidance defines it as: "your business does not do construction work but you have spent more than £3 million on construction in the 12 months since you made your first payment." Once crossed, the full contractor CIS obligations apply immediately.
This guide is specifically about contractor registration. If you are a subcontractor looking to register to get the 20% rate rather than 30%, our guide to how to register for CIS as a subcontractor is the starting point for you.
What you need before you register
Having the right documents and references in place before you start the registration prevents delays and failed applications. For contractor registration you need:
| What you need | Why it is required | How to get it if you do not have one |
|---|---|---|
| Employer PAYE reference | CIS contractor registration requires a PAYE scheme to exist first | Register as an employer with HMRC (allow up to 2 weeks for reference to arrive) |
| UTR (Unique Taxpayer Reference) | Identifies your business in HMRC's records | Register for Self Assessment (sole trader) or Corporation Tax (limited company) |
| Business bank account details | HMRC needs to make any repayments and the account details are verified | Open a business bank account before registering |
| Companies House registration number | Required for limited company contractors | Available from the Companies House register at no cost |
| National Insurance number | Required for sole trader and partnership contractors | Contact HMRC or check previous tax correspondence |
The employer PAYE reference is the step that most frequently causes delays. A new business that has never had employees and is not yet registered as an employer must complete the employer registration before CIS contractor registration is possible. HMRC typically issues PAYE references within five to ten working days online, though postal delays can extend this. Plan for two weeks if you are starting from scratch.
Step-by-step: registering as a CIS contractor
The standard route is online registration through HMRC's Business Tax Account, using the Government Gateway credentials linked to your business.
Step 1: Register as an employer if you have not already done so. Go to HMRC's employer registration service and complete the online form. You will receive a PAYE reference number and an Accounts Office reference. These are the two references that link your CIS contractor account to your payroll obligations.
Step 2: Log into your Business Tax Account. Use your Government Gateway user ID and password to access the Business Tax Account. If you do not have Government Gateway credentials for your business, you will need to set these up first.
Step 3: Add CIS to your account. Within the Business Tax Account, select 'Add a tax, duty or scheme' and choose 'Construction Industry Scheme (CIS) for contractors'. Follow the on-screen prompts, which will ask for your employer PAYE reference, your UTR and your business bank details.
Step 4: Confirm registration. HMRC sends a written confirmation of your contractor registration. This confirms you are registered and can begin using the HMRC CIS online service to verify subcontractors.
Step 5: Verify your first subcontractor before paying them. Once registered, you must verify every subcontractor with HMRC before making the first payment. HMRC returns a verification result of 0% (GPS), 20% (registered) or 30% (unregistered). That result determines the deduction rate you apply to the labour element of the payment.
Agent-assisted registration
An accountant or tax agent can complete the CIS contractor registration on your behalf, provided they hold a valid agent authorisation covering CIS. The agent registers through their own agent services account and handles both the employer registration and the CIS addition in a single process. If you have recently engaged an accountant, confirm that their authorisation covers CIS contractor obligations, not just Self Assessment or Corporation Tax, because the two authorisations are separate.
The most common approach for agents dealing with new construction businesses is to register for PAYE and CIS simultaneously, so that both obligations are active from the first pay period and the first subcontractor payment.
What happens after registration: day-one obligations
From the point of registration, every CIS contractor carries a monthly compliance cycle. For a new contractor, these obligations begin immediately:
Verification before first payment. Before paying any subcontractor, verify their CIS status with HMRC via the CIS online service or through CIS-compatible payroll software. HMRC returns the deduction rate to apply.
Deduction calculation. Apply the verified rate to the labour element only of the payment. Materials the subcontractor buys for the job are excluded from the deduction base. A £2,000 invoice consisting of £1,400 labour and £600 materials is deducted on £1,400. At 20%, that is £280 withheld, not £400.
CIS300 monthly return. File the CIS300 by the 19th of the following tax month. Tax months run to the 5th, so the return covering activity to 5 August is due by 19 August. Payment to HMRC is due by the 22nd (electronic) or the 19th (cheque).
Nil returns from April 2026. Where no subcontractor payments are made in a given tax month, a CIS300 nil return must still be filed by the 19th, or HMRC must be pre-notified of inactivity. This obligation was reinstated from 6 April 2026 after being removed in 2015. A new contractor with seasonal or intermittent workloads must track this obligation in every month from registration onwards.
Payment and deduction statements. Within 14 days of each payment, issue a payment and deduction statement to the subcontractor showing the gross amount, the materials element, the deduction rate and the amount deducted.
The monthly responsibilities checklist in our guide to CIS contractor monthly responsibilities covers each step in detail, with a worked example across three subcontractors.
April 2026 due-diligence obligations at registration
Finance Act 2026 (c. 11, enacted 18 March 2026) inserts FA 2004 ss.62A/62B, creating a knowledge-based penalty of 20% of the payment for a contractor that pays a subcontractor knowing, or having reason to know, of a deliberate CIS compliance failure in the supply chain. The "should have known" standard means that a contractor cannot rely on not having looked. Failure to carry out due diligence is itself sufficient for liability.
From day one of registration, the three due-diligence steps must be completed before each subcontractor payment:
- Re-verify the subcontractor's CIS status with HMRC using the online CIS verification service, even if you have worked with that subcontractor before.
- Run a Companies House legitimacy check on each subcontractor that is a limited company, confirming that the company is registered, active and the name matches what you have been given.
- Verify bank account name. Confirm that the name on the bank account to which you are making the payment matches the registered business name. Mismatches are a due-diligence flag.
Document all three checks with dates and results. HMRC can ask for this evidence in a compliance review, and the due-diligence defence depends on demonstrating the steps were actually taken.
GPS revocation where these steps are not followed triggers a five-year ban on GPS reapplication for any GPS-holding subcontractor connected to a fraudulent transaction. The financial cost to a subcontractor earning £300,000 a year who loses GPS is roughly £60,000 a year in additional upfront deductions. That exposure is why GPS-holding subcontractors are also incentivised to work with contractors who take the due-diligence obligation seriously.
The deemed contractor route: what it looks like in practice
A business that is not in the construction trade and that finds it has crossed the £3 million rolling 12-month construction spend threshold must register for CIS as a deemed contractor. The registration process is the same as for a mainstream contractor, but there are two practical differences to be aware of.
First, the trigger date is the point at which the rolling 12-month spend first reaches £3 million. The obligation to register arises at that point, not at the end of a calendar year or at the end of the accounting period. A business commissioning a major building programme that crosses the threshold in August must register in August, not at its next annual filing date.
Second, the deemed contractor's existing PAYE registration from its main employment activities already satisfies the employer-PAYE-reference requirement. In many cases the deemed contractor simply adds CIS to its existing Business Tax Account rather than going through the employer registration step.
The deemed contractor rules, including which types of businesses are caught and how the threshold is calculated, are covered in full in our guide to deemed contractors explained.