{"id":10489,"date":"2021-03-29T15:24:39","date_gmt":"2021-03-29T14:24:39","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=10489"},"modified":"2026-01-28T07:02:16","modified_gmt":"2026-01-28T07:02:16","slug":"cis-workers-vs-paye-which-is-best","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/construction-and-labourers\/cis-workers-vs-paye-which-is-best\/","title":{"rendered":"CIS workers vs PAYE: which is best?"},"content":{"rendered":"\n<p>If you work in construction, there are two ways to get paid.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Umbrella company PAYE<\/li>\n\n\n\n<li>CIS<\/li>\n<\/ol>\n\n\n\n<p>These two payment methods can seriously shake up how much tax you pay and what ends up in your pocket. Knowing the difference is key for <strong>CIS workers<\/strong> who want to keep more of what they earn. \ud83d\udcb8<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is PAYE?&nbsp;<\/h2>\n\n\n\n<p>PAYE stands for Pay As You Earn. What this means in practice is that you pay tax directly from your salary each month. It\u2019s deducted based on your exact earnings and calculated using your tax code.<\/p>\n\n\n\n<p>When you&#8217;re employed or working through an umbrella company, you&#8217;re typically paid via PAYE. This comes with employee benefits like holiday and sick pay, plus perks from certain employers, such as private healthcare &#8211; benefits that <strong>CIS workers<\/strong> might miss out on. \ud83d\ude14<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Wait, what\u2019s a tax code?<\/h2>\n\n\n\n<p>Your tax code is made up of numbers and letters and it\u2019s the reference that your employer\/HMRC uses to work out how much money they need to take out of your pay to cover tax.&nbsp;If you&#8217;re transitioning from being a self-employed <strong>CIS worker<\/strong> to PAYE, understanding your tax code is essential.<\/p>\n\n\n<div class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return.png\" width=\"1280\" height=\"672\" srcset=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-300x158.png 300w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-1024x538.png 1024w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-768x403.png 768w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return.png 1280w\" class=\"wp-block-image__media\" sizes=\"auto, (min-width: 1000px) 768px, calc(100vw - 48px)\" alt=\"How to file a tax return\"><\/div>\n\n\n<h2 class=\"wp-block-heading\">What are CIS workers?<\/h2>\n\n\n\n<p>CIS stands for <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/cis-scheme\/\" target=\"_blank\" rel=\"noreferrer noopener\">Construction Industry Scheme<\/a>. It\u2019s basically a scheme started by HMRC to make sure that <strong>CIS workers<\/strong> pay the correct amount of tax. \ud83d\udd75\ufe0f\u200d\u2640\ufe0f<\/p>\n\n\n\n<p>If you\u2019ve not registered for CIS and received your UTR number, your contractor deducts 30% tax from your pay, which is almost always more than you owe. <\/p>\n\n\n\n<p>But when you\u2019re being paid under the CIS scheme, you\u2019ll have 20% deducted from your pay each month. This deduction, however, isn\u2019t based on a tax code so it often means that you still end up paying too much tax at the end of each tax year.&nbsp;<\/p>\n\n\n\n<p>Most <strong>CIS workers<\/strong> overpay tax during the year and can claim a refund at the start of the new tax year (from 6th April).The amount that you can claim back depends on how much you worked during the year and how much you overpaid.&nbsp;<\/p>\n\n\n\n<p>It\u2019s usually around \u00a32,000.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Which is better: <strong>CIS workers, PAYE or self-employed?<\/strong><\/h2>\n\n\n\n<p>We\u2019ve put together a table to show you the pros and cons of being paid via an umbrella company on PAYE, as a CIS worker, and being self-employed (i.e. you\u2019re just paid via an invoice and have to calculate and deduct tax yourself).<\/p>\n\n\n\n<p>Take a look at the comparison \ud83d\udc47<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><\/td><td><strong>CIS<\/strong>                <\/td><td><strong>Umbrella company PAYE<\/strong><\/td><td><strong>Self-employed<\/strong><\/td><\/tr><tr><td>Holiday pay<\/td><td>\u274c<\/td><td>\u2705<\/td><td>\u274c<\/td><\/tr><tr><td>Sick pay<\/td><td>\u274c<\/td><td>\u2705<\/td><td>\u274c<\/td><\/tr><tr><td>Tax rebate<\/td><td>\u2705<\/td><td>\u274c<\/td><td>\u274c<\/td><\/tr><tr><td>File a tax return<\/td><td>\u2705<\/td><td>\u274c<\/td><td>\u2705<\/td><\/tr><tr><td>Claim back expenses<\/td><td>\u2705<\/td><td>\u274c<\/td><td>\u2705<\/td><\/tr><tr><td>Employment protection<\/td><td>\u2705<\/td><td>\u2705<\/td><td>\u274c<\/td><\/tr><tr><td>Option to be paid gross<\/td><td>\u2705<\/td><td>\u274c<\/td><td>\u2705<\/td><\/tr><tr><td>National Insurance deducted automatically<\/td><td>\u274c<\/td><td>\u2705<\/td><td>\u274c<\/td><\/tr><tr><td>Job freedom<\/td><td>\u2705<\/td><td>\u274c<\/td><td>\u2705<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Switching from CIS worker to PAYE Mid-Year<\/h2>\n\n\n\n<p>If you\u2019re a <strong>CIS worker<\/strong> and decide to switch to PAYE mid-tax year, it\u2019s perfectly fine. All you need to do is get in touch with HMRC and get your records updated. You can also consult with your accountant (ahem, like Taxfix) who will make sure all your calculations are correct.&nbsp;\ud83d\ude0f<\/p>\n\n\n\n<p>But if you do this, bear in mind that you\u2019ll still need to file a tax return for the part of the year that you were being taxed through the CIS. You\u2019ll still get a rebate if you\u2019re due one based on your earnings but it will most likely be less than usual. <\/p>\n\n\n\n<p>If you plan on continuing work under PAYE, you might want to ask your accountant to <a href=\"https:\/\/taxfix.com\/en-uk\/how-to-stop-being-self-employed\/\" target=\"_blank\" rel=\"noreferrer noopener\">de-register you as self-employed<\/a>. This will make sure that HMRC don&#8217;t expect you to complete a tax return each year.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Need to file your CIS worker tax return?<\/h2>\n\n\n\n<p>Well, it\u2019s your lucky day. Get your <a href=\"https:\/\/taxfix.com\/en-uk\/self-assessment-tax-returns\/\" target=\"_blank\" rel=\"noreferrer noopener\">CIS tax return<\/a> filed by an accredited accountant from just \u00a3119, all in. \ud83c\udf89<\/p>\n\n\n\n<p>Expecting a refund? We can take payment from your rebate for \u00a3279, so you don\u2019t pay upfront. Our experts understand the unique needs of <strong>CIS workers<\/strong>, from claiming expenses to maximizing your profit.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you work in construction, there are two ways to get paid.&nbsp; These two payment methods can seriously shake up how much tax you pay and what ends up in your pocket. Knowing the difference is key for CIS workers who want to keep more of what they earn. \ud83d\udcb8 What is PAYE?&nbsp; PAYE stands [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[443,440],"tags":[188,414,411],"class_list":["post-10489","post","type-post","status-publish","format-standard","hentry","category-construction-and-labourers","category-self-employed-tax-returns","tag-construction-industry-scheme","tag-employment-status","tag-self-employed"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CIS workers vs PAYE: which is best? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"Learn the key differences between CIS workers and PAYE, and how each payment method affects your tax and income.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/construction-and-labourers\/cis-workers-vs-paye-which-is-best\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CIS workers vs PAYE: which is best? 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