If someone has told you to "go CIS" and you're not sure what that means for your tax, your rights, or whether you're still classed as self-employed — you're not alone.
It's one of the most common points of confusion I see in 25 years of working with construction workers across South Yorkshire.
The short answer is this: CIS vs self-employed isn't a choice between two different things. CIS workers are self-employed. CIS is simply the name of the scheme that governs how your tax gets collected.
Quick Answer
CIS (Construction Industry Scheme) workers are self-employed. Being on CIS does not change your employment status — it changes how your tax is collected.
Instead of paying all your tax once a year through self assessment, your contractor deducts it from your payments monthly and passes it to HMRC.
You are still self-employed, you still file a self assessment return each year, and you still have no employee rights.
Are CIS Workers Self-Employed? (The Short Answer)
Yes — and this is the single biggest misconception I come across. People hear "CIS" and assume it's a separate employment category. It isn't.
The Construction Industry Scheme is an HMRC tax collection scheme that applies specifically to the construction industry. It covers self-employed individuals and businesses working for contractors on construction projects. What it does is change how your tax gets to HMRC — not what you are.
Outside construction, a self-employed person invoices a client, gets paid the full amount, and then pays their tax directly to HMRC once a year via self assessment. Under CIS, the same self-employed person invoices a contractor, but the contractor deducts 20% (or 30% if you're unregistered) before paying you, and sends that deduction to HMRC on your behalf. The net result for HMRC is the same. The difference is timing and who makes the payment.
You are still self-employed. You still run your own business. You still set your own rates and take your own work. CIS is the collection mechanism, not your employment status.
What Does CIS Actually Change About Your Tax?
Here's where it matters in practice. The table below shows the real differences between a regular self-employed person and a CIS subcontractor:
| Real Differences | Regular Self-Employed (non-construction) | CIS Subcontractor (construction) |
|---|---|---|
| Are you self-employed? | Yes | Yes — CIS does not change this |
| How do you get paid? | Gross — full invoice amount, no deductions | Net — contractor deducts 20% (or 30% if unregistered) before paying you |
| Who pays HMRC the tax? | You — via self assessment, once a year | Your contractor pays it monthly on your behalf as a deduction |
| Do you file self assessment? | Yes | Yes — you still must file every year |
| Can you claim expenses? | Yes | Yes — same rules apply |
| Do you get employee rights? | No | No — you are not an employee |
| Are you likely to get a refund? | Possible but less common | Very common — most subcontractors overpay |
The key practical difference is cash flow. A regular self-employed plumber receives their full invoice amount and sets aside money for their tax bill in January. A CIS subcontractor receives their invoice minus 20% — that money has already gone to HMRC.
The upside is that many CIS subcontractors end up with a refund at year end, because the deductions are taken without accounting for your personal allowance or business expenses.
That refund is one of the most underused benefits of being a CIS subcontractor. If you've been working in construction and have never claimed one, our CIS tax refund guide explains exactly how much you might be owed and how to claim it.
Do You Need to Register for Both CIS and Self Assessment?
Yes — and this catches a lot of people out. They are two completely separate registrations with HMRC, and you need both.
- CIS registration — registers you as a subcontractor under the Construction Industry Scheme. It determines your deduction rate: 20% if registered, 30% if not. You register via HMRC's website. Do this before your first job or you will immediately be deducted at the higher rate.
- Self assessment registration — registers you for the annual tax return system. This gives you a Unique Taxpayer Reference (UTR). You need this to file your return, claim your expenses, and receive any CIS refund you are owed.
The most common mistake I see from new CIS subcontractors is registering for CIS but not self assessment — or registering for self assessment but not CIS. Both are required. You can register for both on the HMRC website.
If you're unsure which route applies to you, our self assessment service can handle both registrations and your first return.
What Are the Practical Differences Day to Day?
Once you're registered and working, here's what CIS actually looks like in practice compared to regular self-employment:
- You invoice your contractor for your labour (and any materials separately). The contractor deducts 20% from the labour element only — not from materials.
- Your contractor gives you a CIS payment and deduction statement each time they pay you. Keep every single one — you need these to file your self assessment return and claim any refund.
- At the end of the tax year, you file a self assessment return. You declare your gross income (the full amount before deductions), claim your allowable expenses, and enter the total CIS deductions. HMRC calculates whether you owe more tax or are owed a refund.
- You are responsible for your own National Insurance contributions. Class 2 NIC (if applicable) and Class 4 NIC are paid through your self assessment return — your contractor does not handle these.
- You have no employee rights. No sick pay, no holiday pay, no redundancy. This is the trade-off for the flexibility and higher day rates that typically come with self-employed construction work.
If you're a CIS subcontractor in Rotherham, Barnsley, Sheffield, Doncaster, Leeds, or Wakefield and want to make sure you're set up correctly from the start, our CIS returns service handles everything — registration, annual returns, expense claims, and refunds.
Frequently Asked Questions
Can you be self-employed and on CIS at the same time?
Yes — and this is the most important thing to understand. CIS does not replace self-employment. It is a tax collection mechanism applied on top of it.
You are self-employed. CIS is simply how HMRC collects your tax upfront, through your contractor, rather than waiting for you to pay it at the end of the year.
Do I need to register for CIS and self assessment separately?
Yes — they are two separate registrations. CIS registration gives you your subcontractor status and determines whether you pay 20% or 30% deductions.
Self assessment registration gives you a UTR number and allows you to file your annual return. You need both. New subcontractors often miss one of the two — usually self assessment — and then face penalties later.
What happens if I work in construction but don't register for CIS?
Your contractor will deduct 30% from your payments instead of 20%. That extra 10% is almost never what you actually owe — so you'll almost certainly be owed a bigger refund at the end of the year.
But in the meantime, you're giving HMRC an interest-free loan every month. Register for CIS as soon as you start construction work.
Does being on CIS mean I'm employed?
No. The deductions from your pay can feel similar to PAYE, and you may receive statements that look like payslips — but you are not an employee.
You have no entitlement to sick pay, holiday pay, or redundancy under CIS. Employment status is a question of fact, not what you are called or how you are paid.
Can I move from CIS to PAYE?
Yes — if your working arrangement changes to the point where you are genuinely employed (same site, same contractor, working like an employee), you should be on PAYE, not CIS.
HMRC takes employment status misclassification seriously, and the liability falls on the contractor if they get it wrong. If you are unsure which applies to you, get advice before assuming CIS is correct.
Still Not Sure Where You Stand?
CIS is straightforward once someone explains it properly — but the confusion between CIS, self-employment, and employment causes real problems for construction workers every year, from wrong deduction rates to missed refunds to unfiled returns.
If you've recently started construction work, changed your working arrangement, or just want to make sure everything is set up correctly, the best thing to do is get it checked properly rather than guessing.
Book a free 30-minute call with us — there's no obligation, and you'll come away knowing exactly which registrations you need, what you can claim, and whether there's a refund waiting for you.