Renters' Rights Act 2025, Phase 1 commencement
Transition readiness pack
England

Property Tax

Construction Industry Scheme UK — Landlord as Contractor, Subcontractor Verification, and Gross Payment Status

Covers the mainstream and deemed contractor tests (FA 2004 s.59; £1m 3-year average threshold); CIS registration and subcontractor verification (GPS 0%; registered 20%; unregistered 30%); gross payment status qualifying conditions and cancellation triggers; monthly CIS300 return obligations; penalties; and common landlord CIS mistakes.

18 min readUpdated 8 June 2026Last reviewed: 17 May 2026cisconstruction-industry-schemecontractorsubcontractor

Who Is a CIS Contractor? — Mainstream and Deemed Contractor Tests

Mainstream contractors: businesses whose main activity is construction — always within CIS. Deemed contractors (FA 2004 s.59): non-construction businesses spending over £1m per year on average on construction operations in any 3-year period. Large portfolio landlords carrying out major refurbishment programmes can cross this threshold. Construction operations (FA 2004 s.74) include repair, alteration, extension, decoration, and M&E installation — but not professional services or materials supply only.

CIS Registration and Subcontractor Verification

Register online via Government Gateway. Before first payment, verify each subcontractor with HMRC: GPS (0% deduction); registered without GPS (20% of labour element); unregistered (30% of labour element). Deductions only from the labour element — materials paid in full. File monthly CIS300 returns by 19th of the following month; penalties from £100/month for late or non-filing. Nil returns must also be filed in some circumstances.

Gross Payment Status — Qualifying and Maintaining

GPS allows subcontractors to receive payments without CIS deductions. Qualifying conditions: 3-year compliance record (ITSA; CTSA; PAYE; VAT; CIS); wholly/mainly construction business; annual turnover above £30,000 (sole trader) or £30,000 per director up to £300,000 (company). GPS cancellation triggers: late filing; late payment of PAYE/VAT; outstanding tax debt. Cancellation is automatic; subcontractor must immediately notify all contractors.

CIS Penalties and Landlord-Specific Risks

Failure to deduct: contractor personally liable for the undeducted tax; cannot recover from HMRC even if the subcontractor has paid. Monthly return penalties: £100 per month escalating to 100% of liability after 12 months. Common landlord mistakes: not recognising deemed contractor status; paying gross without verification; deducting on the full invoice (not just the labour element). VAT excluded from CIS calculations — pay VAT in full regardless of CIS status.

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