CIS and Domestic Work: When CIS Doesn't Apply

The Domestic Exemption

One of the most common questions in the construction industry is whether CIS applies to work done for homeowners and domestic customers. The short answer is no — CIS does not apply when the customer is a homeowner or occupier commissioning construction work on their own property.

This is known as the domestic exemption, and it is an important boundary in the CIS rules.

When CIS Does Not Apply

CIS does not apply when:

• A homeowner hires a builder to extend their house, fit a new kitchen, or carry out repairs
• A tenant commissions work on their rented home (with the landlord's permission)
• A property owner hires tradespeople for maintenance on their own home

In these situations, the homeowner is not a contractor under CIS. They do not need to verify subcontractors, make deductions, or file monthly returns. They simply pay the tradesperson the full invoice amount.

When CIS Does Apply to Property Work

The exemption only covers work commissioned by someone for their own domestic property. CIS does apply in these situations:

Landlords

If a landlord hires a subcontractor to carry out work on a rental property, CIS may apply if the landlord is a contractor or deemed contractor. However, most individual landlords do not spend enough on construction to be deemed contractors (the threshold is £3 million in a rolling 12-month period).

If a landlord is simply maintaining a buy-to-let property and spending modest amounts, CIS usually does not apply.

Property Developers

If someone buys a property, renovates it, and sells it for profit, they may be carrying on a construction business. If they regularly pay subcontractors, they could be a contractor under CIS.

The key question is whether the property work is a business activity or a personal domestic activity. Renovating your own home to live in is domestic. Buying properties to renovate and sell is a business.

Businesses Operating from Home

If you run a business from your home and commission construction work on the business part of the property, CIS may apply if you are a contractor for other reasons. But if you are simply a sole trader having your home office painted, the domestic exemption generally applies.

The Grey Areas

Multiple Properties

If you own several rental properties and regularly engage subcontractors, you are approaching the territory where CIS might apply. The £3 million deemed contractor threshold is the key test, but in practice, most individual landlords fall well below it.

Self-Build Projects

If you are building your own home to live in, this is domestic work and CIS does not apply. However, if you are building a home to sell, it could be a commercial activity subject to CIS.

Mixed Use Properties

If a property is part residential and part commercial (for example, a flat above a shop), the treatment depends on the nature of the work. Work on the residential part may be exempt; work on the commercial part may fall within CIS.

What This Means for Subcontractors

As a subcontractor, you need to understand the domestic exemption because:

• Domestic customers do not deduct CIS — you receive the full payment
• You still pay tax on the income — the exemption is from CIS deductions, not from income tax
• You still need to declare this income on your Self Assessment return

Some subcontractors mistakenly believe that domestic work is tax-free because no CIS deduction is made. This is wrong. All income is taxable, whether or not CIS applies.

Record Keeping for Domestic Work

Even though CIS does not apply, you should keep the same standard of records for domestic work as you do for CIS work:

• Invoices issued
• Payments received
• Expenses incurred
• Receipts for materials

What This Means for Homeowners

If you are a homeowner hiring a tradesperson:

• You do not need to register for CIS
• You do not need to make deductions
• You pay the agreed invoice amount in full
• You have no filing obligations with HMRC

However, you should ensure the tradesperson you hire is properly insured and competent. CIS registration is not relevant to domestic customers, but checking reviews, references, and insurance is good practice.

How Accounted Handles Mixed Income

Many subcontractors work for both CIS contractors and domestic customers. Accounted handles both:

• CIS income — deductions tracked, statements stored, refunds calculated
• Domestic income — recorded as self-employment income without CIS deductions
• Combined tax estimate — your total tax liability across all income sources

Explore our pricing plans and see how Accounted manages your whole income picture.

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Whether your work is CIS or domestic, every pound needs recording. Sign up for Accounted and let Penny keep your books straight regardless of who your customer is.