CIS vs PAYE: which is better for your subbies?

If you regularly use the same trades, you've probably wondered whether they should be on the payroll. Here's the honest answer.

The direct answer

For the vast majority of construction subcontracting, CIS is the right model. PAYE makes sense only if a trade works exclusively for you, full-time, indefinitely, and you want them treated as an employee in every meaningful sense. For anything else — a few days a month, different jobs, different builders — CIS is correct and PAYE creates problems without solving any.

What CIS actually is

CIS is a tax collection mechanism, not an employment model. The trade remains self-employed — they set their rate, work when they choose, take on multiple clients. The contractor deducts tax from each payment and passes it to HMRC monthly. The trade reclaims it through self-assessment at year end.

When you book through Cabin, Cabin sits in the payment chain — you pay Cabin, Cabin pays the trade. That makes Cabin the CIS contractor, not you. Your CIS obligation is entirely eliminated. The trade's tax position is unchanged — they still receive full credit for every deduction made on their behalf.

What PAYE actually involves

PAYE is for employees. If you put a trade on PAYE you're responsible for:

• Employer's National Insurance — 13.8% on earnings above the secondary threshold
• Pension auto-enrolment contributions
• Statutory sick pay and holiday pay
• Full employment rights from day one
• Monthly payroll, RTI submissions to HMRC
• Potential redundancy liability if the relationship ends

For a trade earning £250/day, employer's NI alone adds roughly £25/day on top of their rate. The admin burden is substantially heavier than CIS, not lighter. Most builders who consider PAYE to simplify things find it does the opposite.

The IR35 problem

This is where builders get into real trouble. If a trade consistently works only for you, follows your schedule, uses your tools, and operates entirely under your direction, HMRC may determine that regardless of what you've agreed on paper, the relationship is employment. That's IR35.

CIS naturally supports genuinely self-employed working patterns — trades working across multiple builders, bringing their own expertise, setting their own rates. These are the people CIS is designed for.

When PAYE genuinely makes sense

If a trade has been working exclusively for you, five days a week, for an extended period — you may already have a de facto employee regardless of how you're currently paying them. In that situation PAYE is the right answer and the risk of continuing on CIS is real. Get proper advice from a construction accountant.

For everyone else — occasional subbies, short-notice bookings, trades you use a few times a year — CIS is correct.

Four mistakes to avoid

1. Treating a long-term exclusive subbie as CIS when IR35 may apply. If someone has been working only for you for an extended period, get advice before assuming CIS covers you.
2. Assuming CIS means no employer obligations at all. CIS doesn't protect you if the working relationship looks like employment in practice.
3. Putting trades on PAYE to reduce admin. PAYE admin is significantly heavier than CIS admin. You're not simplifying — you're adding complexity and cost.
4. Not verifying CIS status before the first payment. If you're paying a trade directly, HMRC expects you to verify through their portal before making the first payment. On Cabin, we handle this for you.