The Construction Industry Scheme. Contractors deduct tax from payments to self-employed subcontractors and pass it to HMRC as an advance against your tax and National Insurance. Registered subcontractors have 20% deducted; unregistered have 30%.

Is umbrella or CIS better?

It depends on your circumstances and neither is universally better. Umbrella gives you employment rights and simplicity but carries a margin and employer costs within the assignment rate. CIS can leave more in your pocket if you have genuine allowable expenses, but you carry the admin and no employment rights. Compare actual take-home, not headline rates.

Do I have to use the umbrella company the agency tells me to?

Agencies often have a preferred supplier list and may require you to use one of them. You are entitled to ask what the margin is and what your gross pay will be before agreeing. If the arrangement is not explained clearly in writing, that is a warning sign.

Do I need an accountant?

Not legally, but if you are working under CIS and claiming expenses, one who knows construction usually pays for themselves. At minimum, register for CIS promptly and keep every deduction statement.

CIS, umbrella or PAYE — how you'll actually get paid

Construction pay arrangements are their own maze. What CIS is, what an umbrella company does, how PAYE differs, and what each means for your take-home.

Updated 27 July 2026

The three arrangements

PAYE employment is the simplest. You are employed, income tax and National Insurance come off before you are paid, and you accrue holiday, sick pay and pension. Most resort operational roles will be PAYE.

CIS applies to self-employed subcontractors in construction. The contractor deducts tax from your payments and sends it to HMRC as an advance against your bill. You still file a Self Assessment return, and you can claim allowable expenses against your income.

An umbrella company sits between you and the agency. It employs you, receives an assignment rate from the agency, deducts what it must, and pays you a salary. You get employment rights, and a margin is retained.

Worth knowing. Registering for CIS matters. Unregistered subcontractors have 30% deducted rather than 20% — you get the difference back eventually, but you have lent HMRC a substantial sum in the meantime for no reason.

Why the umbrella rate looks better than it is

The number an agency quotes for an umbrella assignment is usually the assignment rate, not your gross pay. Out of it come employer's National Insurance, the apprenticeship levy, holiday pay and the umbrella's margin — and then your own tax and National Insurance.

This is legal and normal, but it is also where people get caught out, because £250 a day via an umbrella and £250 a day PAYE are very different amounts in your account.

Ask before you accept anything:

Is this rate PAYE, CIS or umbrella assignment rate?
If umbrella, what is the margin and what will my gross pay actually be?
Is holiday pay included in the rate or paid separately?
Am I being offered a choice, or is the arrangement fixed?
If CIS, am I genuinely self-employed for this work, or being told I am?

False self-employment

Being paid through CIS does not make you self-employed. Employment status depends on the reality of the arrangement — who controls your work, whether you can send a substitute, whether you take financial risk.

If you work set hours, under supervision, using someone else's tools, with no ability to send someone else in your place, you may be an employee regardless of what the paperwork says. That matters, because it affects holiday pay, sick pay and rights on dismissal.

Worth knowing. Avoid any arrangement that pays part of your money as a loan, grant or advance. Those are disguised remuneration schemes, HMRC pursues them, and the liability lands on you, not the promoter.

Keep records

Under CIS you need your payment and deduction statements to reconcile what has been deducted. Keep every one, keep receipts for tools, PPE and travel between sites, and put money aside for the Self Assessment bill.

If you are new to self-employment, an accountant who specialises in construction will usually save you more than they cost in the first year.

Primary sources

Check these rather than taking our word for it. Rules and figures change.

This guide is general information, not legal, tax or employment advice. We are not a recruiter and hold no vacancies. Rules change and circumstances differ — check the primary sources above or take professional advice before making a decision.

Common questions

What is CIS?: The Construction Industry Scheme. Contractors deduct tax from payments to self-employed subcontractors and pass it to HMRC as an advance against your tax and National Insurance. Registered subcontractors have 20% deducted; unregistered have 30%.
Is umbrella or CIS better?: It depends on your circumstances and neither is universally better. Umbrella gives you employment rights and simplicity but carries a margin and employer costs within the assignment rate. CIS can leave more in your pocket if you have genuine allowable expenses, but you carry the admin and no employment rights. Compare actual take-home, not headline rates.
Do I have to use the umbrella company the agency tells me to?: Agencies often have a preferred supplier list and may require you to use one of them. You are entitled to ask what the margin is and what your gross pay will be before agreeing. If the arrangement is not explained clearly in writing, that is a warning sign.
Do I need an accountant?: Not legally, but if you are working under CIS and claiming expenses, one who knows construction usually pays for themselves. At minimum, register for CIS promptly and keep every deduction statement.