Construction Industry Scheme The Chancellor in his pre-budget speech took the opportunity to confirm that the new construction industry scheme will come into force from April 2007, after being postponed on two previous occasions. It was announced that the deduction rates for the new scheme would be 20% for registered sub-contractors and 30% for un-registered sub-contractors. The current scheme has a deduction rate of 18% but, in recent years, this has meant more and more sub-contractors under-paying throughout the year and having to make additional payments through their self assessment return at the end of the year, says HMRC. The new rate of 20% will help to rebalance the numbers who need to pay extra and those who receive refunds at the end of the year, ensuring that more sub-contractors meet their full tax liability in year and helping to protect those whose liability isn't fully met from large end of year payments. The higher rate has been set at 30% and is aimed at ensuring that unregistered subcontractors can be paid for work they do, while encouraging them to register promptly with HMRC. close article