Construction Industry Scheme

Short Definition: UK tax scheme where contractors deduct tax from subcontractor payments.

Long Definition: The Construction Industry Scheme (CIS) is a UK tax system introduced by HMRC for the construction sector. Under CIS, contractors must deduct a percentage from subcontractors’ payments and pass it directly to HMRC. These deductions act as advance payments towards the subcontractor’s tax and National Insurance. The scheme helps ensure tax compliance across the construction industry.