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Switch from PAYE to CIS

The Construction Industry Scheme (CIS) is a specialised set of tax rules for the construction industry. You sign up to CIS when you switch from working PAYE to being self-employed in the building trade. The scheme is HMRC's attempt to crack down on ''cash-in-hand'' tax evasion scams in the industry.

Under CIS, your contractor takes 20% of your pay and send it to HMRC as an advancement toward the tax you'll owe. Every year, RIFT Tax Refunds helps thousands of construction workers with their CIS problems, questions and refunds. Here are some of the frequent questions we tackle.

CIS vs PAYEWhat's the difference between PAYE & CIS?

When you’re employed by someone else, the Income Tax and National Insurance Contributions (NICs) you owe on your earnings are taken out by your employer before you’re paid. This is called the Pay As You Earn (PAYE) system.

If you’re a self-employed subcontractor in the construction industry, instead of using PAYE to pay what you owe, you’ll file yearly Self Assessment tax returns to settle up with HMRC. However, construction has a special system called the Construction Industry Scheme (CIS), which is supposed to crack down on tax dodging in the building trade. Under CIS, your contractor will take out 20% of your pay before you get it, to send directly to HMRC. That’s a big chunk of your cash to lose, but you can settle up with the taxman through your Self Assessment tax returns if you end up paying too much.

CIS paymentsHow much do I pay under CIS?

When you’re signed up for CIS, your contractor will take out 20% of your pay before handing the rest over. That 20% goes directly to HMRC, as a way of clamping down on illegal “cash-in-hand” payments. If your CIS payments mean you end up paying more tax than you owe in a year, you can reclaim what you’re owed when you file your Self Assessment tax return.

It sounds like a lot of money to lose, but watch out – if you’re not signed up for CIS when you’re supposed to be, your contractor will have to take off a 30% instead.

HMRCHow do I pay CIS tax to HMRC?

CIS payments are taken out of your pay automatically by your contractor. Your contractor will set up a CIS payment scheme to handle this, making monthly payments to HMRC on your behalf.

CIS RegistrationHow long does it take to become CIS registered?

If you’re already registered for the Self Assessment, it shouldn’t really take more than a few days to get yourself set up for CIS online. However, if you’re only just registering yourself as self-employed, you’ll also need to get a Unique Taxpayer Reference (UTR) number and sign up for Self Assessment with an SA-1 form, which can take a few weeks.

CIS Tax AdviceI'm becoming self-employed. Can you help me register for CIS?

Of course! When you first choose to be your own boss, here’s how we can help:

Get in touch with us. We'll send out your free RIFT CIS Starter Pack. It’s incredibly important to keep good records if you want to keep your tax bill under control. Your starter pack has everything you need to get the ball rolling.
Register for CIS. RIFT will get you all set up for the scheme, guiding you through the whole process and taking care of any questions along the way.
That’s it – you’re all set to start earning.

Registering for CIS is basically essential if you want to be self-employed in construction. Signing up for the scheme immediately cuts down the cash swiped from your pay by a third – from 30% to 20%. Depending on your set-up, you may also be able to claim a yearly mileage refund and work-related expenses from HMRC.

Start your claim for free

UTR NumberDo I need a UTR number?

You’ll definitely need a Unique Taxpayer Reference (UTR) number whenever you’re dealing with HMRC. That includes when you sign up for CIS. Your UTR is unique to either your company or yourself, and it’s how HMRC identifies you.

Don’t worry, though. Sorting out your UTR is part of the RIFT service, so we’ll take care of it automatically for you when we help you switch from PAYE to CIS. Click our UTR Number link for more information.

What is a UTR Number?

Construction worker tax adviceWhat if I've switched between PAYE and CIS part-way through the year?

That’s absolutely fine! Just shoot us a few basic details of where you’ve worked and how you were employed there. We’ll take care of both your CIS and PAYE jobs together when we sort out your tax rebate for the year.

CIS to PAYE Tax AdviceHow do I get out of CIS if I'm going PAYE?

While HMRC does a reasonable job of showing people how to sign up for CIS, they’re a lot less excited about explaining how to leave it. If you’re a big fan of phone queues, there’s an official helpline you can try, but they do tend to get overworked so you might have to wait a while. You’ll also have to shuffle some paperwork and tie up some loose ends to get out of the scheme entirely.

Before you ask – yes, RIFT can definitely take care of this for you. Just give us a heads-up when you want to switch to PAYE and we’ll tackle the taxman for you. It makes no difference if you’re just quitting CIS or leaving construction altogether. The chances are you’ll still be able to claim your yearly tax rebates, so we’ll still be able to sort your claims for you.

In fact, whatever tax help you need, get in touch. It's what we're here for, and no one does it better. Or, if you're interested, you can use our CIS tax rebate calculator for an estimate of what you tax you could get back from HMRC.

Start your claim for free CIS Tax Rebate Calculator

Employment statusWhat does my employment status actually mean?

Your employment status can make a big difference to the tax you owe, along with your entitlement to a range of rights and benefits. Here’s a quick rundown:

Employee: your pay is taxed “at source” by your employer (through PAYE), but you can claim tax refunds on a range of essential work expenses. You’re entitled to the National Minimum Wage or National Living Wage, as well as a range of employment rights, benefits and statutory payments.
Worker: similar to an employee in many respects, with most of the same benefits. You’ll have some form of contract and you’ll pay your tax through PAYE. Your situation might be a little “looser” than an employee’s, though. For instance, you might be able to subcontract some of your work out. You may also be working through an agency, in which case your contract’s probably with them.
Zero hours worker: things get trickier here. You’re probably an employee, but your employer doesn’t need to guarantee you any set hours. You’re generally meant to be taxed PAYE, but might have the option to class yourself as self-employed instead. If you’re on PAYE, you’ll get some basic employment rights.
Apprentice: Apprentices are PAYE employees gaining hands-on experience in an industry. The minimum wage you qualify for depends on your age and how long you’ve been apprenticing. You won’t automatically qualify for full employment rights, benefits and statutory pay unless you’re working over 33 hours a week.
Self-employed: Self-employed people don’t pay their tax through PAYE. Instead, they use the Self Assessment system and send regular tax returns to HMRC. Many of the day-to-day expenses of your trade can be used to bring down the amount of tax you owe. Most employment rights and benefits don’t apply to you, and you’ll need to sign up for CIS if you’re in construction.

New ways of working, like the ''gig economy'', are muddying the waters a bit, meaning a lot of people are confused about what their true employment status. Make sure you talk to RIFT if you're not 100% clear on where you stand. We'll make sure that everything's in order and keep you in HMRC's good books.

Change in employment statusCan I still claim a tax refund if my employment status changes?

Yes, changing employment status doesn’t mean giving up on your tax rebates. The refund system is for anyone who’s paid too much to HMRC, and you can claim back what you’re owed for up to 4-years, even if you’ve switched employment status in the meantime. A refund for even a partially qualifying year is still worth claiming, so get in touch to find out how much you’re owed.

CIS expensesWhat other expenses can I claim as a CIS scheme subcontractor?

When you’re self-employed in construction, there’s a whole range of essential everyday expenses that will help to bring down the tax you pay through the Self Assessment system. As well as work travel expenses you can also claim for:

Tools, equipment and specialised clothing.
The costs of running a home office, including phone and internet charges.
Any fees or subscriptions to essential professional bodies.

Get an estimate of your CIS tax rebateCIS tax rebate calculator

When claiming a tax rebate did you know it's possible to claim for the past 4 tax years? The average 1 year CIS tax rebate with RIFT is worth £1,867 (as of October 2024), the average claim for 4 tax years increases to £7,486 (as of October 2024). If you're employed under the Construction Industry Scheme, you'll have expenses you can claim tax back on. To get an estimate of how much you can claim back, use our CIS tax rebate calculator. You'll get an estimate in seconds.

CIS Tax Rebate Calculator

Change in employment statusWhat changes can affect my tax situation?

Of course, switching your employment status isn’t the only big change that can affect your tax. For instance, you may have money coming in from outside your main job (like rental income, for instance) or you might have a change in your salary or benefits situation. Even changes in your personal life like getting married or having children can make a difference. Whatever happens, RIFT can always help.

Our GuaranteeOur guarantee means you'll never lose a penny

When you claim your tax rebate with RIFT, our unique RIFT Guarantee means that you don't have to worry about the taxman reclaiming any of your money. So long as you give us full and accurate information, if HMRC disagrees with the amount that we’ve claimed and ask for the money back, we’ll pay it. It won’t cost you a penny.

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