Paying someone under CIS does not make them self-employed. Here is what actually decides it, and why it matters to both of you.
27 October 2026 · 6 min read
As soon as you take someone on, even for a few days a week, you have to decide how you are paying them. In construction the easy route is to call everyone a subcontractor and run them through CIS. Sometimes that is right. Sometimes it is not, and the label on the paperwork does not decide it. What decides it is how the work actually happens. This is general guidance; for a specific case, talk to your accountant.
HMRC looks at the whole working arrangement. The main points are: control (do you decide how, when and where they work, or do they?), substitution (could they send someone else to do the job instead?), financial risk (do they price the job and stand to lose money if it goes wrong, or are they paid by the day whatever happens?), equipment (do they bring their own tools and van?), and putting mistakes right (would they fix bad work in their own time and at their own cost?). Someone who works only for you, on your hours, with your tools, doing what you tell them, looks like an employee, whatever the invoice says.
HMRC has a free online tool, Check Employment Status for Tax, which asks about the arrangement and gives a view. Answer it honestly about how the work really happens, not how you would like it to look, and keep a copy of the result. It is a useful sense-check and a record that you thought about it.
The Construction Industry Scheme is about how payments to subcontractors are taxed, not about whether someone is a subcontractor in the first place. If they are genuinely self-employed, you register as a contractor, verify them with HMRC, deduct at the rate HMRC gives you (20% if they are registered, 30% if they are not, nothing if they have gross payment status), and file a monthly return. The CIS guide covers it in full, and the CIS subcontractor calculator shows what they take home.
If HMRC decides someone you treated as a subcontractor was really an employee, you as the person paying them can be asked for the PAYE income tax and National Insurance that should have been collected, plus interest and possibly penalties. Employment rights are a separate question, decided by the employment tribunal rather than HMRC, and someone can be a "worker" with rights such as holiday pay even if they are self-employed for tax. Getting the label wrong can cost far more than it ever saved.
Being genuinely self-employed means acting like a business: pricing jobs, working for more than one contractor where you can, using your own kit, and invoicing properly. On the Pro plan, GraftG produces CIS invoices with the deduction shown, so your records match what the contractor files. See how CIS works in GraftG.
No. CIS decides how payments to subcontractors are taxed, not whether someone is self-employed. Status depends on how the work really happens, including control, the right to send a substitute, financial risk and who provides the equipment.
HMRC can ask the business paying them for the PAYE income tax and National Insurance that should have been collected, plus interest and possibly penalties. The person may also have employment rights, such as holiday pay, that were not provided.
Look honestly at how the work is done: who controls it, whether they could send someone else, who takes the financial risk, and who provides tools. HMRC’s free Check Employment Status for Tax tool gives a view, and your accountant can advise on borderline cases.
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