CIS or CIS Umbrella? A Simple Guide
Explore the crucial differences between CIS and CIS Umbrella, discover which suits your contractor business in the UK, and gain actionable steps to avoid costly mistakes in the construction sector.

Cutting Through the Fog: CIS or CIS Umbrella?
If you’re a construction contractor in the UK, you’ve already heard the nightmare stories. Lost wages, HMRC penalties, shady intermediaries. Choosing the wrong tax scheme isn’t just a paperwork nuisance—it's a trigger for disaster. So, let’s slice through the confusion. Should you operate under the Construction Industry Scheme (CIS) or sign up with a CIS Umbrella company? This guide will torch the jargon and show you a clear, bold path forward.What You Absolutely Need on the Table
Before you make this mission-critical decision, arm yourself with:- Your Unique Taxpayer Reference (UTR)
- National Insurance number
- Company registration details (if you run a limited company)
- HMRC registration status for CIS
- Contracts with clients or agencies
- CIS: Register directly with HMRC. You manage your own tax, NI, and business filings. Flexibility, but total responsibility.
- CIS Umbrella: You become an employee. The umbrella company handles PAYE, deductions, and HMRC admin. You get employment rights but sacrifice some autonomy (and sometimes higher fees).
- For CIS, register with HMRC if you haven't already. Keep paperwork brutally organised.
- For CIS Umbrella, double-check the company’s reputation. Demand transparency on fees. Don’t fall for empty promises—get everything in writing.
- Submit invoices, check payslips for correct deductions, and keep copies.
- Under CIS, set aside tax and NI. Missing a payment means HMRC will pounce without mercy.
- Under CIS Umbrella, scrutinise payslips for unexplained deductions. Question everything.
- Delayed Payments? Chase hard and escalate. Subcontractors: If you suspect foul play, contact HMRC immediately.
- Surprise Deductions? Refuse to accept excuses. Insist on a detailed breakdown, especially with umbrella firms. If the math doesn’t add up, walk.
- HMRC Penalties? Respond instantly. Don’t let fines compound. Seek professional help if you’re unsure what triggered the penalty.
Forget assumptions. These details form the backbone of your business legitimacy.
The Unvarnished Process: Step-by-Step
1. Understand What’s at Stake
2. Weigh the Real Costs
Scheme | Manage Your Own Tax? | Admin Burden | Employment Rights | Typical Fees |
---|---|---|---|---|
CIS | Yes | High | None | Low |
CIS Umbrella | No | Low | Statutory (sick/holiday pay) | Medium to High |
3. Register or Sign Up
4. Start Work—and Stay Vigilant
5. Review Regularly
Your career, your rules. Review your scheme annually, or any time your circumstances change. Don’t be a passenger—drive your business.The Savage Truths: Troubleshooting
It’s not enough just to choose. What do you do when things fall apart?Take Back Control
You aren’t just fighting for your wage—you’re claiming your right to fair, transparent work. Choosing between CIS and CIS Umbrella shouldn’t be a gamble. Equip yourself, demand clarity, and never settle for less than you deserve.Take action now:
1. Review your current scheme. Does it serve your interests, or just someone else’s profits?
2. Audit the paperwork. Any murky deductions? Get explanations immediately.
3. Connect with a qualified construction accountant if anything’s unclear.
Don’t become another statistic in the industry’s chaos. Stand up, take charge—and get paid what you’re owed.