CIS for Limited Company Subcontractors

Key facts

Limited companies can register as CIS subcontractors and are subject to the same deduction rates (20%, 30%, or 0%) as individuals.
CIS deductions suffered are offset against PAYE, NICs, student loan, and CIS liabilities the company owes as an employer.
The company reports deductions suffered on its Employer Payment Summary (EPS) through RTI.
Any unrecovered CIS deductions at year-end are offset against Corporation Tax on the CT600 return.
If total CIS deductions exceed all liabilities, HMRC issues a repayment.

Overview

Many construction subcontractors operate through limited companies. While the CIS deduction mechanism works the same way (contractors deduct 20% or 30% from payments), the process for reclaiming those deductions is fundamentally different from sole traders. Instead of claiming through Self Assessment, limited companies offset deductions through the payroll system and Corporation Tax.^[1]

CIS Registration for Companies

A limited company registers as a CIS subcontractor using:^[1]

Its Corporation Tax UTR (Unique Taxpayer Reference)
Its company registration number (from Companies House)
The company’s registered name and address

Once registered, when a contractor verifies the company with HMRC, the appropriate deduction rate is confirmed. Companies can also apply for gross payment status (0% deduction) if they meet the qualifying conditions.

The Offset Order

CIS deductions suffered by a limited company are offset in a specific order prescribed by HMRC:^[2]

PAYE tax the company owes on its employees’ wages
Employer and employee Class 1 NICs
Student loan deductions
CIS deductions the company owes as a CIS contractor (if it is also a contractor)
Corporation Tax — any remaining balance is offset against the company’s annual CT liability

If the CIS deductions exceed all of these liabilities, HMRC will issue a repayment.

Example: Your company suffers £4,000 in CIS deductions in a tax month. Your PAYE/NIC liability for that month is £2,500. You submit an EPS showing £4,000 CIS deductions. Your payment to HMRC for the month is reduced to £0, and the remaining £1,500 is carried forward to offset against the next month’s PAYE/NIC liability.

Reporting via the Employer Payment Summary (EPS)

The Employer Payment Summary is submitted monthly through RTI-compliant payroll software. To claim CIS deductions:^[2]

Gather all payment and deduction statements from contractors for the tax month (6th to 5th)
Total up the CIS deductions suffered
Enter the total in the CIS deductions field on the EPS
Submit the EPS to HMRC by the 19th of the following month
Reduce your PAYE/NIC payment to HMRC by the CIS amount

EPS Deadline

Tax Month	Period	EPS Deadline
Month 1	6 Apr – 5 May	19 May
Month 2	6 May – 5 Jun	19 Jun
Month 3	6 Jun – 5 Jul	19 Jul

Tip: Most payroll software has a dedicated field for CIS deductions suffered on the EPS. If you cannot find it, check the software’s CIS or “recoveries” section. If you are not running payroll (no employees), you will need to register as an employer with HMRC in order to submit an EPS.

Claiming via the Corporation Tax Return (CT600)

If at the end of the tax year (5 April), the company still has unrecovered CIS deductions (because PAYE/NIC liabilities were less than the total deductions for the year), the remainder is claimed on the CT600 Corporation Tax return:^[3]

The CT600 includes a box for CIS deductions suffered that have not been recovered through the EPS
HMRC offsets the amount against the company’s Corporation Tax liability
If the deductions exceed Corporation Tax due, HMRC issues a repayment

Companies with No PAYE Scheme

Some limited company subcontractors have no employees and no PAYE scheme (e.g. a single-director company where the director takes only dividends). In this case:

You should register as an employer with HMRC even if you have no employees, so you can submit an EPS
Alternatively, you can wait and claim all CIS deductions on your CT600 return
The CT600 route means waiting until the Corporation Tax return is filed (typically 12 months after the accounting period end)

Record-Keeping Requirements

Limited company subcontractors must keep:^[1]

Payment and deduction statements from every contractor — retain for at least 6 years
Invoices issued to contractors showing gross amounts, materials, and labour
Bank statements confirming net payments received
EPS records showing CIS deductions reported each month
CT600 records showing any year-end offset claimed

Frequently Asked Questions

Can a limited company register for CIS?

Yes. Limited companies can register as CIS subcontractors in the same way as sole traders. The company registers using its Corporation Tax UTR and company registration number. Once verified, contractors apply the appropriate deduction rate (20% standard, 0% for gross payment status, or 30% if unverified).

How does a limited company reclaim CIS deductions?

Limited companies offset CIS deductions suffered against their monthly PAYE/NIC liabilities using the Employer Payment Summary (EPS). If deductions exceed the monthly PAYE/NIC bill, the excess is carried forward. Any remainder at year-end is offset against Corporation Tax on the CT600. If deductions still exceed all liabilities, HMRC issues a refund.

What is the Employer Payment Summary (EPS)?

The EPS is a monthly submission to HMRC through Real Time Information (RTI) payroll software. It includes a field for reporting CIS deductions suffered. By including this figure, the company reduces its monthly PAYE/NIC payment to HMRC by the CIS amount.

What if the company has no employees and no PAYE liability?

If the company has no PAYE liability to offset against (e.g. the directors take only dividends and there are no other employees), the CIS deductions are carried forward and offset against Corporation Tax. The company claims the deductions on its CT600 return.

Sources

CIS: company subcontractors — GOV.UK
CIS: company subcontractors offsetting deductions (CISR77010) — HMRC
Company Tax Return guide (CT600) — HMRC