CIS vs umbrella in construction comes down to one question: are you running your own business, or are you an employee of a payroll company that sits between you and the site? On CIS you're self-employed, you get 20% held back as tax (30% if you're not registered), and you sort the rest out on your tax return. Through an umbrella you're on PAYE, and the costs of employing you come out of your rate before you see a penny. Agency PAYE is the third route, where the agency employs you directly.
None of them is a scam. They're just different deals. The problem is most lads on site sign whatever the agency puts in front of them on day one and never look at the numbers again.
Quick line before we start: this isn't tax advice. I'm a contractor, not an accountant. I'll point you to the HMRC pages as we go, and if your situation is anything but simple, pay an accountant for an hour.
Updated 25 October 2026.
CIS vs umbrella construction: the short answer
Here's the difference in plain words.
- CIS (Construction Industry Scheme): you're a self-employed subcontractor. Whoever pays you deducts 20% if you're registered, 30% if you're not, and passes it to HMRC. That deduction is a payment towards your tax bill, not extra tax. You claim your expenses at year end. HMRC's guide: what you must do as a CIS subcontractor.
- Umbrella: a company employs you, invoices the agency for your hours, then pays you through PAYE. You get employee rights like holiday pay and statutory sick pay. You also pay for the privilege. HMRC's guide: working through an umbrella company.
- Agency PAYE: the agency puts you on its own payroll. No middle company, no umbrella margin.
The headline rate on the job ad means nothing until you know which of these you're on.
How agency CIS actually works
Agency CIS sounds simple. The agency or engager pays you as a subbie, takes the 20%, and you're done.
But there's a rule a lot of people don't know about.
The supervision, direction or control rule
If you're supplied through an agency and someone on site has the right to supervise, direct or control how you do the work, HMRC's employment intermediaries rules say you should be taxed as an employee. PAYE, not CIS.
So if you're labouring on a big site, told where to stand and what to lift, and paid through an agency on CIS, ask questions. That's exactly the setup HMRC looks at. HMRC explains how it decides status here: employment status.
If you're a carpenter pricing a package, bringing your own tools and deciding how the job gets done, CIS fits.
Where Hudson Contract fits
Hudson Contract isn't a recruitment agency in the usual sense. It sits between construction firms and self-employed subbies as the engager. It drafts the contracts, reviews whether each person should be on CIS, and runs the CIS payments. Its pitch is to the contractor: take the employment status risk off their hands.
For you on the tools, it means you're still self-employed, still on CIS deductions, and your contract is with Hudson rather than directly with the firm you're working for. Read that contract. Know who you actually invoice and who you'd chase if a payment went missing.
How an umbrella company works in construction
The agency agrees a rate with the client. The umbrella invoices the agency. Then, out of that rate, the umbrella takes:
- Employer's National Insurance
- The Apprenticeship Levy, where it applies
- Holiday pay, either rolled up or held back
- Its own margin, usually a fixed weekly or per-payslip fee
- Then your income tax and employee NI, like any PAYE job
The bit people hate hearing: the employer costs in points 1 and 2 come out of your rate. On a normal PAYE job your employer pays those on top. Through an umbrella, the rate you were quoted is the pot that pays for everything.
Where Bar2 and PayStream fit
Bar2 is a UK contractor payroll firm that runs umbrella payroll and payroll bureau services. PayStream runs an umbrella called My Max and a CIS service called My CIS aimed at construction.
They're payroll providers. They don't find you work. The agency does that, and the agency usually tells you which umbrella or CIS provider it uses. You're often allowed to pick from a list. Use that.
I'm not going to quote you their fees. They change, they depend on the deal, and I won't print a number I can't stand behind. Ask each one in writing: what's your margin per week, is it taken per payslip, and what else comes out before tax.
What changed in April 2026
From 6 April 2026, if an umbrella fails to pay the PAYE and NI it owes HMRC, the agency (or the end client, if there's no agency) can be held jointly and severally liable for it. Agencies have every reason now to drop dodgy umbrellas.
Good for you. If an umbrella offers you a take-home figure that looks too good to be true, it is. That's where the tax avoidance schemes live, and HMRC can come after you as well. Check the HMRC umbrella guidance linked above.
Agency PAYE
Some agencies put you straight on their own payroll. No umbrella margin, and the agency pays employer's NI on top of what you earn rather than out of your rate.
The rate you're offered will often be lower than the umbrella rate for the same job, because the agency is carrying those costs. Compare them on what lands in your bank account, not the headline number.
Read the deal like it's your margin
When I ran my maintenance company in London, the whole thing ran on subbies. The ones I kept calling back knew their own numbers. They knew what a day cost them before they picked up the phone.
Do the same. Here's an illustrative example, with made-up round numbers to show the maths, not a quote from any of these firms:
Example: you're offered £200 a day for five days.
- On CIS at 20%: £1,000 gross, £200 held back for HMRC, £800 paid to you. That £200 counts against your tax bill. Your van, tools and fuel are your costs, and you claim the allowable ones at year end. Put money aside for the tax that's still due.
- Through an umbrella: the £1,000 first pays employer's NI, any levy, holiday pay and the umbrella's weekly fee. What's left gets taxed as normal PAYE. Ask for a pay illustration before you start, and check your first payslip against it line by line.
- On agency PAYE: your gross pay is the agreed rate, taxed through PAYE. The employer costs are the agency's problem.
None of these is automatically better. CIS suits someone running a proper business with real expenses. PAYE suits someone who wants holiday pay and doesn't want to deal with self assessment. You need to know which one you are.
Your CSCS card is your cost either way
Whatever the engagement, most sites won't let you through the gate without a CSCS card. CSCS lists the application fee at £36, and you'll usually need the CITB Health, Safety and Environment test first, which is a separate fee. Check current prices on the CSCS website.
CSCS also warns about third-party sellers charging admin fees on top. Book direct.
On CIS, that card is a business cost. Talk to your accountant about whether you can claim it. Through an umbrella, don't let anyone tell you it's a reason to pay a bigger margin.
Working direct: where Plan@Job fits
This is the part nobody in the agency chain will tell you. If you've got a trade, your own tools and a bit of business sense, you don't have to rent your hours through anyone.
Plan@Job is AI-powered project and operations management for construction and property businesses. The operator is the contractor business running the client, the project and the subbies. You, as a subcontractor, are the external business doing the assigned work.
Here's how it works:
- You sign up as a subcontractor business.
- Operators on Plan@Job share eligible jobs with their vetted network. In supported workflows, you can price before vetting is complete.
- You send your quote. The operator decides whether to award it. Nothing is awarded automatically.
- Checks and approval happen at the right stage before you start on site.
- You get paid by the operator under the terms you both agreed, under CIS where it applies. Plan@Job doesn't add a weekly umbrella margin, because there's no umbrella in that relationship.
What needs a person's decision: your price, the operator's award, and the payment terms. The software doesn't fix any of that for you.
If you run your own crew and want to be the operator yourself, see how Plan@Job works for contractors. If you want to understand how jobs move through stages, the project management feature shows it.
And if you want to talk to other people building a contracting business properly, that's what Contractor Club is for.
FAQ
Is CIS or umbrella better for construction workers?
Neither is better on its own. CIS suits self-employed tradespeople with real business expenses who control how they work. Umbrella or agency PAYE suits people working under supervision who want employee rights. Compare what actually reaches your bank, and check HMRC's employment status guidance if you're unsure which applies.
Can an agency pay me through CIS if I'm supervised on site?
Normally not. HMRC's employment intermediaries rules say that if you're supplied through an agency and subject to supervision, direction or control, you should be on PAYE. If you're in that position and being paid CIS, raise it with the agency and get advice.
Do I need an umbrella company to work through Plan@Job?
No. On Plan@Job you work as a subcontractor business with the operator who awards you the job. Payment terms are agreed between you and that operator, under CIS where it applies, with no umbrella in the middle.
If you're tired of watching a weekly margin come off every payslip, sign up as a contractor on Plan@Job and start pricing work directly.