Am I a contractor or a subcontractor under CIS?

Under the Construction Industry Scheme (CIS), you are a subcontractor when you are paid for construction work and a contractor when you pay others for it. If you do both in 2026-27, GOV.UK says you register as both.

The words have a special meaning in CIS. HMRC's CIS 340 guide says they cover more than the trade usually means by them. A contractor is not just a main contractor on a big site. It is any business that pays someone else for construction work. A subcontractor is anyone who carries out construction work for a contractor, whether they do it themselves or through their own workers.

Who counts as what

A gang leader is both by definition: a subcontractor to whoever pays the gang, and a contractor to the people in it. From 6 April 2026, payments to local authorities and public bodies acting as subcontractors are outside CIS.

What this means for you

Most sole traders start as subcontractors only. The change usually comes quietly: you win a bigger job and bring in a self-employed labourer or another trade to help. The moment you pay them for construction work, you are a contractor for that payment, even if you are still a subcontractor to the builder above you.

Being a contractor brings real admin. GOV.UK says you must:

• register as a contractor before you take on your first subcontractor
• check whether the person should be an employee instead
• verify each subcontractor with HMRC before you pay them
• deduct at the rate HMRC gives you and pay it over by the 22nd of the month, or the 19th by post
• give each subcontractor a payment and deduction statement and file a monthly return by the 19th

Late monthly returns cost £100 at 1 day late and £200 at 2 months late, rising from there. From 6 April 2026, mainstream contractors must file a nil return for months with no payments unless they told HMRC in advance.

If you only work for homeowners and pay no one else, you are neither. CIS does not apply to that work at all.

Steps to work out where you stand

1. List who paid you for construction work this tax year. Any builder, developer or other business makes you a subcontractor for that work.
2. List anyone you paid for construction work. Paying any of them makes you a contractor for that work.
3. Check whether the people you pay are really self-employed. If they should be employees, they go through PAYE, not CIS.
4. If you are a subcontractor, register for CIS so contractors deduct 20% rather than 30%.
5. If you are a contractor, register before you take on your first subcontractor. You do this through HMRC's process for new employers.
6. If you are both, keep the two sides apart in your records: deductions taken from you, and deductions you made and paid over.

Where it gets less clear

• Property investors. A business that buys and lets property is normally a deemed contractor only above £3 million. CIS 340 says that if it builds new property or redevelops a building in a way that changes its use, that part of its activity counts as development and makes it a mainstream contractor.
• Small jobs for deemed contractors. HMRC can agree that a deemed contractor need not apply CIS to a contract under £1,000, excluding VAT and materials, but you must contact the CIS helpline to arrange it.
• Work outside CIS. Jobs such as architecture, surveying, carpet fitting and scaffolding hire with no labour are outside the scheme, whoever pays for them.

Use the free MTD check to see whether and when Making Tax Digital applies to you, and visit the trades section for more on CIS.