CIS workers vs PAYE: which is best?

Suleiman Halim

May 20, 2026

If you work in construction, there are two ways to get paid.
1. CIS
2. PAYE

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.

What is PAYE?

PAYE stands for Pay as You Earn. What this means in practice is that you pay tax directly from your salary each month. It’s deducted based on your exact earnings and calculated using your tax code.

When you’re employed or working through a company, you’re typically paid via PAYE. This comes with employee benefits like holiday and sick pay, benefits that CIS workers might miss out on.

Wait, what’s a tax code?

Your tax code is made up of numbers and letters and it’s the reference that your employer/HMRC uses to work out how much money they need to take out of your pay to cover tax. If you’re transitioning from being a self-employed CIS worker to PAYE, understanding your tax code is essential.

What are CIS workers?

CIS stands for Construction Industry Scheme. It’s basically a scheme started by HMRC to make sure that CIS workers’ pay the correct amount of tax.

If you’ve 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.

But when you’re being paid under the CIS scheme, you’ll have 20% deducted from your pay each month. This deduction, however, isn’t 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.

Most CIS workers 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.

Which is better: CIS workers, PAYE or self-employed?

Let’s put together a table to show you the pros and cons of being paid via a company on PAYE, as a CIS worker, and being self-employed.
See below at the comparison:

	CIS	Umbrella company PAYE	Self-employed
File a tax return	✓	✕	✓
Employment protection	✓	✓	✕
Tax rebate	✓	✕	✕
Job freedom	✓	✕	✓
Holiday pay	✕	✓	✕
Sick pay	✕	✓	✕
Option to be paid gross	✓	✕	✓
Claim back expenses	✓	✕	✓
National Insurance deducted automatically	✕	✓	✕

Switching from CIS worker to PAYE Mid-Year

If you’re a CIS worker and decide to switch to PAYE mid-tax year, it’s 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 who will make sure all your calculations are correct.

But if you do this, bear in mind that you’ll still need to file a tax return for the part of the year that you were being taxed through the CIS. You’ll still get a rebate if you’re due one based on your earnings, but it will most likely be less than usual.

If you plan on continuing work under PAYE, you might want to ask your accountant to de-register you as self-employed. This will make sure that HMRC don’t expect you to complete a tax return each year.

Need to file your CIS worker tax return?

Well, it’s your lucky day. Get your CIS tax return filed by an accredited accountant from just £130, all in.

CIS refund: all your FAQs answered.

What happens after I’ve filed my tax return?

After we’ve filed your return, all you need to do is prepare to pay your bill. You can do this either direct on HMRC online or via your account where we’ll redirect you to HMRC’s payment portal.

What is agent authorisation and why is it sometimes needed?

Agent authorisation is a way to let your accountant represent you and act on your behalf when communicating with HMRC. If there are any issues, your accountant can step in and help, and they can also access information about your previous employers to make sure they have everything they need to complete your return.

When your accountant requests agent authorisation, HMRC will send you a letter with a code to your address on file. You can add it directly onto your profile.

How long does a CIS refund take?

Once your return has been filed, it typically takes HMRC between 6-12 weeks to process and pay a CIS refund. If it’s a particularly large rebate or your first time claiming, HMRC may run additional security checks. This can include verifying your identity and personal details.

Why has HMRC changed my CIS refund amount?

Your tax return is calculated based on the information you provide to your accountant. Once submitted, HMRC cross-checks this against their records, which may include historical tax code changes, late payment fines, or other deductions.

Since only HMRC has access to this data, your CIS refund amount may be adjusted accordingly. We unfortunately don’t have access to unpaid fines or changes in tax codes unless you’re able to tell us about them.