The Construction Industry Scheme (CIS) is a UK government initiative designed to tackle tax evasion in the construction industry.
It requires contractors to deduct a portion of their subcontractors’ payments for income tax and National Insurance contributions, and pay it directly to HM Revenue & Customs. Subcontractors can optionally register with the CIS to ensure that the correct amount of tax is deducted from their payments.
By helping to ensure that everyone pays the appropriate amount of tax, the CIS aims to create a level playing field for businesses in the construction industry and promote fair competition.
Whereas the subcontractor is still classified (by HMRC) as a self-employed individual, CIS mortgages are available that allow the CIS ‘payslip’ to be used as proof of gross income. For participating lenders, this allows them to offer a higher mortgage amount.
