Construction Industry Scheme (CIS)

When a main contractor working in the construction industry deducts money from a sub-contractor and pays it over to HMRC, these are deductions under the 'Construction Industry Scheme'.

When the self- employed sub-contractor registers for the scheme and files their subsequent tax returns, the tax year deducted amount is taken into account in the tax calculation. This usually results in a refund of tax due to the fact that the main-contractor, when making the deductions, cannot take into account the expenses incurred by the sub-contractor when carrying out their work (see 'Business Expenses').