How CIS Tax Deductions Work
The Construction Industry Scheme is a mandatory system where contractors deduct tax at source from payments to subcontractors for construction work. The deductions are advance payments towards the subcontractor’s tax and NI bill.[1]
CIS Deduction Rates
| Status | Deduction Rate |
|---|---|
| Registered subcontractor | 20% |
| Not registered | 30% |
| Gross payment status | 0% (paid gross) |
Registration is free and reduces your deduction from 30% to 20%, so there’s no reason not to register.[4]
Who CIS Applies To
CIS covers construction work including:[1]
- Building and civil engineering
- Alterations, repairs, decorating
- Dismantling and demolition
- Installation of heating, lighting, power, water, and ventilation systems
It does not cover architecture, surveying, or professional consultancy that doesn’t involve physical construction work.
Registering as a Subcontractor
You can register online through your Government Gateway account or by phone. You’ll need your UTR and National Insurance number.[4]
CIS Statements
Each month, contractors send you a CIS payment and deduction statement showing the gross amount, deductions, and net payment. Keep these — you’ll need them for your tax return.[2]
Getting Your CIS Deductions Back
CIS deductions are not a final tax. They’re advance payments towards your total Income Tax and NI bill. When you file your Self Assessment return:[3]
- Your total tax liability is calculated as normal
- CIS deductions are credited against your bill
- If more was deducted than you owe, you get a refund
Many subcontractors get refunds. Once you deduct allowable expenses (materials, tools, travel, etc.), your actual tax liability is often less than the 20% CIS deductions. Filing your return promptly is the fastest way to get your money back.
Gross Payment Status
If you meet certain conditions, you can apply to receive payments without deductions:[1]
- Turnover of at least £30,000 (per partner in a partnership)
- Up-to-date tax returns and payments
- Good compliance history
Frequently Asked Questions
What is the CIS deduction rate for subcontractors?
Registered subcontractors have 20% deducted from their payments. Unregistered subcontractors face a 30% deduction. Those with gross payment status receive payments without any deductions.
Can I get a CIS tax refund?
Yes. CIS deductions are advance payments towards your total tax bill, not a final tax. When you file your Self Assessment return, deductions are credited against your liability and if more was deducted than you owe, you receive a refund.
How do I register as a CIS subcontractor?
You can register for free online through your Government Gateway account or by phone. You will need your UTR number and National Insurance number. Registration reduces your deduction rate from 30% to 20%.
What is CIS gross payment status?
Gross payment status means you receive payments without any CIS deductions. To qualify, you need a turnover of at least £30,000, up-to-date tax returns and payments, and a good compliance history with HMRC.
Further Reading
- Allowable Expenses for Self-Employed
- How to Claim a Tax Refund
- How to Register as Self-Employed
- How to File Your Tax Return
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Sources
- What is the Construction Industry Scheme — GOV.UK
- Construction Industry Scheme: detailed information — GOV.UK
- Claim a CIS tax refund — GOV.UK
- CIS: register as a subcontractor — GOV.UK
- Self Assessment tax returns — GOV.UK