If you’re providing fitting services in the window and door industry, the Construction Industry Scheme (CIS) almost certainly applies to your business. If you think it doesn’t, there’s a strong chance you’remistaken. While supply-only businesses may be exempt, any company providing labour services—particularly fitting—needs to take CIS seriously to avoid penalties.
In this article, I’ll explain what CIS is, when it applies, and how window and door installers can stay compliant.
What Is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) was introduced by HMRC to reduce tax evasion in the construction sector. Under CIS, contractors deduct a portion of payments to subcontractors and pass them directly to HMRC.
These deductions count as advance tax payments toward the subcontractor’s tax and National Insurance.
Which services does CIS apply to?
CIS applies to a wide range of construction-related services. These include:
1. Construction Work:
- Foundations, bricklaying, and masonry
- Roofing, plastering, and rendering
- Painting and decorating
- Installing systems such as heating, lighting, power, water, ventilation, and air conditioning
2. Alterations and Repairs:
- Renovations, refurbishments, and repairs to existing structures
- Extensions and modifications to buildings
3. Installation Services:
- Installing permanent systems like electrical wiring, gas fittings, plumbing, heating, and air conditioning systems
- Installation of windows and doors, conservatories and roofline
- Installation of security systems such as fire alarms, CCTV, and burglar alarms
Which services are excluded?
Services which are not seen as altering the fabric of the building are generally excluded. These include:
- Supply-Only Services: If you supply windows or doors without labour (e.g., no fitting), CIS does not apply.
- Surveying
- Service Engineer Work: For example, repairs or maintenance of existing installations are excluded
- Installation of Garage Doors
When Does CIS Apply to Installers?
For window and door installers, CIS applies in two scenarios:
When you hire subcontractors: This includes self-employed fitters (a large part of the industry) or other tradespeople like builders, plasterers, or electricians.
When you act as a subcontractor: If you’re working for a main contractor, builder, or developer, CIS applies to the services you provide.
CIS and Labour vs. Materials
CIS applies only to labour services and not to the cost of materials. This is where many businesses get caught out.
Subcontractors must split their invoices between labour and materials so that deductions apply only to the labour portion. Failure to do this risks overstating deductions and upsetting cash flow.
Registering for CIS
Registration can be done through the HMRC website or with the help of an accountant. You will need to make separate registrations if you are both a contractor and a subcontractor.
How CIS Deductions Work
For Subcontractors
- If you’re registered under CIS, contractors will deduct 20% from the labour portion of your invoice.
- If you’re not registered, the deduction increases to 30%.
- Example: You invoice £10,000 for fitting services (excluding VAT and materials). After a 20% deduction, you receive £8,000.
For Contractors
- You must verify subcontractors’ CIS status with HMRC before making payments.
- Deduct the correct rate and issue a CIS deduction statement to the subcontractor.
- Submit a monthly CIS return detailing payments and deductions made.
CIS Deduction Rates Explained
There are three CIS deduction rates:
1. 30% – If the subcontractor is not registered under CIS.
2. 20% – The standard deduction for verified CIS-registered subcontractors.
3. 0% (Gross Payment Status) – Subcontractors can apply to be paid in full without deductions if they meet HMRC’s criteria:
Business Test: Operating a construction business in the UK.
Turnover Test: Minimum annual turnover of £30,000 per director or sole trader.
Compliance Test: A clean history of timely tax payments and returns.
Many subcontractors fail to qualify for Gross Payment Status due to poor compliance, so staying on top of tax filings is critical.
Filing and Payment Deadlines
- Monthly Returns: Due by the 19th of each month.
- Payment to HMRC: Due by the 22nd of each month if paying electronically.
Penalties for late filings start at £100 and escalate with continued non-compliance, making it essential to meet deadlines.
Common CIS Mistakes Installers Make
- Not Registering for CIS: This results in automatic 30% deductions, hitting your cash flow hard.
- Incorrect Invoicing: Failing to separate labour and materials leads to over-deductions.
- Misclassifying Subcontractors: Always verify subcontractors to apply the correct rate.
- Missing Filing Deadlines: Late CIS returns trigger fines and potential HMRC scrutiny.
- Mixing Roles: If you’re both a contractor and subcontractor, keep accurate and separate records.
Tips for Staying CIS Compliant
- Use Accounting Software: Tools like Xero or QuickBooks simplify CIS deductions and returns.
- Verify Subcontractors Early: Don’t wait until payments are due to verify their CIS status.
- Seek Professional Help: A CIS-experienced accountant can save you time, money, and stress.
- Keep Detailed Records: Accurate invoicing and clear labour/material breakdowns are critical.
CIS compliance might feel like another layer of complexity, but it’s unavoidable for most installers providing fitting services. By understanding when CIS applies, splitting invoices correctly, and meeting filing deadlines, you can avoid penalties and protect your cash flow.
If you’re unsure about any aspect of CIS, don’t leave it to chance—seek advice from a professional who understands the challenges of the window and door installation industry. Getting it right can save you time, money, and plenty of headaches in the long run.
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