What Is A Construction Industry Scheme Worker (CIS)

In the realm of employment and tax classifications, the Construction Industry Scheme (CIS) stands as a distinct framework. This article aims to shed light on what a CIS worker is, the differences between employment categories, the challenges of securing a mortgage as a CIS worker, and the essentials needed for a successful mortgage application.

Understanding the CIS Worker

A CIS worker is an individual who operates within the Construction Industry Scheme. This framework was established to regulate payments from contractors to subcontractors in the construction sector. CIS workers are often positioned between the realms of being permanently employed and fully self-employed, forming a unique category within the industry.

Employed

Individuals in permanent employment receive regular salaries and benefits from an employer who deducts taxes and National Insurance Contributions (NICs).

Self-Employed

Self-employed individuals run their businesses, controlling their working hours and clients. They are responsible for their tax affairs.

IR35

IR35 refers to tax legislation addressing individuals who work through an intermediary, such as a limited company, but whose relationship with the client resembles employment.

CIS

CIS encompasses subcontractors in the construction sector. Contractors deduct funds from their payments to subcontractors, which count as advance payments toward their National Insurance and Tax.

Written in August 2023 by:

Sam Chester

Scope and Coverage of CIS Work

CIS work pertains to a wide range of construction activities, including:

Site preparation, like laying foundations and access works.
Demolition and dismantling.
Construction activities.
Alterations, repairs, and decoration.
Installation of utility systems.
Interior cleaning post-construction.

Certain roles are exempt from CIS registration

Architectural and surveying services.
Scaffolding hire without labour.
Carpet fitting.
Manufacturing construction materials and machinery.
Material delivery.
Non-construction activities on construction sites, such as canteen or facility management.

Challenges of CIS Workers in Mortgage Applications

Securing a mortgage as a CIS worker can pose challenges due to variable income patterns and potential instability. Lenders may require a detailed contractor history and income assessment, which could include a stipulated minimum contractor period. Approval might be tougher if you’ve been a CIS worker for less than a year.

Essentials for a CIS Worker Applying for a Mortgage

Understand your day rate and its implications.
Prepare accounts, SA302s, and Tax year overviews for the past three years.
Ensure a strong credit history by reviewing your credit report beforehand.

Role of Umbrella Companies in Mortgage Applications for CIS Workers

Umbrella companies can simplify mortgage applications for CIS workers. They act as intermediaries between contractors and clients, offering consistent income, which can ease the process of proving stability to lenders.

Common tax documents for CIS workers include

Payment and deduction statements from contractors.
Self-Assessment tax returns.
Proof of payment of CIS deductions.
Proof of contributions to National Insurance and pensions.

In navigating the nuances of CIS workers, understanding diverse employment classifications, and gathering essential documentation, you can enhance your odds of successfully obtaining a mortgage that aligns with your financial aspirations.

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Attention Please!!!

The content within this article is as accurate as the date it was written. To ensure the most up to date information, you should consult with one of the experts that we work with as every lender and their polices are different and can be changed or amended without notice.

This website is for information only and does not constitute financial advice. Our mortgage advisers are all fully qualified to provide mortgage advice in accordance with the Financial Conduct Authority (FCA) regulations. We only exclusively operate with businesses that are authorised and regulated by the FCA. All advice offered will be unique to your individual circumstances.

Some Buy to Let mortgages are not regulated by the FCA. You should carefully consider securing other debts against your home. If you do not keep up your mortgage repayments, your home may be repossessed. Equity released from your home will also be secured against it.