What counts as construction work under the Construction Industry Scheme?

When it comes to the Construction Industry Scheme (CIS), many contractors and subcontractors understand the basics – that it’s about tax deductions for construction work. But where things often get tricky is figuring out exactly what counts as construction work.

The CIS doesn’t apply to every task on or around a building site. Some types of work clearly fall under CIS rules, while others don’t. And because HMRC takes compliance seriously, understanding the difference is crucial if you want to avoid unexpected penalties, incorrect deductions, or delays with payments.

In this handy guide, we’ll unpack what the Construction Industry Scheme covers, what it excludes, and how to make sure your business stays compliant.

What is the Construction Industry Scheme?

Before diving into the details of what counts as construction work, it’s worth re-establishing exactly what the CIS actually is.

The Construction Industry Scheme is a set of HMRC rules designed to regulate how payments are made between contractors and subcontractors in the construction sector.

Under the scheme, contractors must deduct money from subcontractors’ payments and pass it to HMRC. These deductions count as advance payments towards said subcontractor’s tax and National Insurance.

What counts as construction work?

HMRC’s definition of ‘construction work’ is broad, but not limitless. According to CIS rules, construction work includes most operations involved in constructing, altering, repairing, extending, demolishing, or dismantling buildings and other structures.

To break it down into more granular detail, the following types of work typically fall under CIS:

General building and civil engineering work

This includes the day-to-day operations most people associate with construction:

• Bricklaying, plastering, and roofing
• Installing foundations or structural steelwork
• Building roads, bridges, tunnels, or other civil works
• Groundworks, drainage, and site preparation

If your business builds, repairs, or alters structures – whether commercial, domestic, or public – you’ll almost certainly fall under the CIS umbrella.

Installation work

The CIS also covers the installation of systems or components that form a permanent part of a building or structure. Examples include:

• Electrical systems, wiring, and lighting
• Plumbing and heating
• Air conditioning and ventilation systems
• Fire alarms, sprinklers, and security systems
• Lifts and escalators

If the system becomes a fixed part of the building once installed, it’s classed as construction work for CIS purposes.

Decorating and finishing

Work that finishes or enhances a structure also falls under the Construction Industry Scheme. That includes:

• Painting and decorating (internal and external)
• Tiling, plastering, or rendering
• Installing flooring or ceilings as part of a build or renovation

Essentially, if your work contributes directly to the physical construction or completion of a building, it likely falls under CIS.

Site preparation and clearance

Construction doesn’t just start when the first brick is laid. Activities involved in getting a site ready also count under CIS, such as:

• Demolition or dismantling of existing structures
• Site clearance and excavation
• Ground levelling and laying foundations
• Installing access roads or temporary works such as scaffolding

Even if the end result isn’t a completed building, preparatory work connected to a construction project still counts.

What doesn’t count as construction work?

This is where the aforementioned confusion often rears its head. Some types of work are closely related to construction, but HMRC specifically excludes them from the Construction Industry Scheme.

In this section, we’ll take a look at five examples, so that you can develop a clearer understanding of what does and doesn’t count as construction under the scheme.

Professional services

Architects, surveyors, and other professionals are not covered by the CIS as long as they’re providing design, planning, or consultancy services rather than physical construction. Examples include:

• Architects producing drawings or designs
• Surveyors carrying out site measurements or valuations
• Structural engineers providing reports
• Health and safety consultants

However, if those same professionals also carry out physical work on-site (for example, installing equipment), those specific tasks would be subject to the CIS.

Manufacturing materials

Businesses that manufacture materials like bricks, windows, or prefabricated components are not covered by the CIS unless they also install what they make on-site. For example:

• A company that supplies ready-made windows is not covered
• A company that manufactures and fits those windows is covered

The key difference is whether the business physically carries out construction-related work on site.

Deliveries and transport

Hauliers and delivery drivers bringing materials or machinery to a construction site aren’t subject to CIS deductions. However, if the worker also installs or assembles what they’ve delivered, then that portion of their work becomes a construction activity and thus should be included.

Scaffolding hire (without labour)

Hiring out scaffolding or plant equipment without providing labour is excluded. But if you supply both the equipment and the workers to assemble and operate it, then it does indeed fall under the CIS.

Work on non-construction sites

Routine maintenance or cleaning work (like window cleaning, carpet fitting, or janitorial services) doesn’t count as construction work. The CIS only applies where the work directly affects the fabric, structure, or systems of a building or site.

Construction work examples: CIS vs non-CIS

To make things clearer, here are some real-world examples:

Why does the distinction matter?

Getting this wrong can cause serious issues for contractors and subcontractors alike. Here’s why it matters:

Incorrect deductions and penalties

If a contractor wrongly applies CIS deductions to a non-construction service, it can cause problems for the subcontractor’s tax records – and potentially trigger HMRC investigations.

Conversely, failing to deduct CIS when you should can lead to penalties, interest charges, and reputational damage. HMRC regularly audits contractors to make sure that deductions are made correctly.

Delays and disputes

Misunderstanding what counts as construction work can lead to disputes over payment terms or responsibilities. Contractors might deduct CIS tax when they shouldn’t, or subcontractors may undercharge or misreport income. Ultimately, clarity upfront helps avoid those awkward conversations later.

Smooth business operations

When you know exactly which services are covered by CIS, you can plan your pricing, cash flow, and reporting properly. That means fewer surprises at the end of each tax month and a smoother relationship with HMRC.

CIS and mixed contracts

Many construction projects involve a combination of activities, some of which fall under the Construction Industry Scheme and others that do not.

For example, a business might design, manufacture, and install specialist fixtures as part of a single project. Another might carry out landscaping alongside structural building work or provide scaffolding hire with the option to include labour.

In each of these cases, the contract includes both construction and non-construction elements, which can make things more complicated when it comes to CIS compliance.

HMRC generally expects that if a contract includes any construction work, the entire contract should be treated as being within the scope of CIS. This rule applies unless the different elements of the contract can be clearly separated.

If you can distinguish between construction and non-construction work – and the separation is genuine, not just for convenience – then only the construction element needs to be subject to CIS.

To avoid unnecessary deductions, it’s good practice to set out separate agreements for construction and non-construction activities wherever possible. For example, one contract might cover the installation or building work that falls under CIS, while another covers design, consultancy, or supply-only services that are excluded.

You should also make sure that your invoices are itemised, with CIS-applicable work clearly identified, and maintain detailed records explaining how you have treated each part of the project.

Taking these steps helps to demonstrate compliance if HMRC ever reviews your accounts and reduces the risk of incorrect deductions or penalties. Clear documentation not only keeps your records in order but also shows that your business takes its CIS responsibilities seriously.

How to stay compliant

Once you’ve identified that your work falls under Construction Industry Scheme criteria, there are several key steps to staying compliant:

1. Verify your subcontractors

Contractors must verify each subcontractor with HMRC before paying them. This determines whether deductions should be made at 20% (registered) or 30% (unregistered), or whether the subcontractor has gross payment status (no deductions).

2. Make the right deductions

Apply the correct rate to the subcontractor’s labour portion of the invoice – not materials or VAT. Getting this right avoids disputes and ensures that subcontractors receive the proper credit from HMRC.

3. Submit monthly CIS returns

Contractors must file monthly CIS returns with HMRC showing all payments and deductions made. Missing deadlines can result in penalties of up to £3,000 per return.

4. Keep accurate records

Maintain clear records of contracts, invoices, CIS verification numbers, deduction statements, and payments made. Good record-keeping protects you during HMRC checks and simplifies year-end reconciliation.

How can One Two One Accounts help?

The Construction Industry Scheme can be complicated and time-consuming, particularly when you’re already juggling projects, suppliers, and deadlines.

Getting your head around registration, monthly returns, and all details of what counts as construction work can easily become overwhelming – and that’s before you consider the risk of penalties for getting it wrong.

At One Two One Accounts, we’re here to take that weight off your shoulders. We specialise in helping contractors and subcontractors understand and manage every part of their CIS responsibilities, keeping you compliant while freeing up your time to focus on running your business.

Our dedicated CIS services cover everything you need to stay firmly on top of your obligations. We handle registration and verification with HMRC, manage your monthly CIS returns and deductions, and provide specialist support with gross payment status applications.

We also prepare and issue subcontractor payment statements and advise on how to manage mixed contracts and record-keeping to minimise compliance risks. By partnering with us, you can be confident that your CIS processes are handled accurately and efficiently.

We take care of the paperwork, reporting, and submissions, ensuring that every detail aligns with HMRC requirements. Whether you’re just getting started with CIS or want to streamline your existing systems, our friendly, knowledgeable team can help you stay compliant and avoid costly mistakes.

Understanding what counts as construction work under CIS is essential, but you don’t have to figure it out on your own. If you’re ever unsure about how the scheme applies to your business, we’ll review your situation and guide you through the process clearly and confidently.

Get in touch with us today and let us help you keep your business compliant, efficient, and in control under the Construction Industry Scheme.