Calculate your CIS
take-home pay.
UK Construction Industry Scheme tax calculator. Works out deductions at 0%, 20%, or 30% and estimates your CIS refund.
Materials are not subject to CIS deduction
CIS Deducted
£0
You Receive
£0
2025/26 tax year
Gross payment
£0.00
Labour amount
£0.00
CIS deduction (20%)
-£0.00
Net payment received
£0.00
CIS deductions are paid directly to HMRC by your contractor as an advance against your tax bill.
- Construction Industry Scheme (CIS)
- A scheme where contractors deduct money from a subcontractor's payments and pass it to HMRC as an advance payment of the subcontractor's tax and National Insurance. Subcontractors can claim back any overpaid CIS deductions via Self Assessment.
What is CIS and How Does It Work?
The Construction Industry Scheme (CIS) is a tax deduction system that applies to payments made by contractors to subcontractors in the construction industry. Under CIS, contractors must deduct a percentage from each payment and pass it to HMRC. These deductions count as advance payments towards the subcontractor's annual tax and National Insurance bill.
Contractors are businesses or individuals who pay subcontractors for construction work. All contractors must register with HMRC for CIS and verify each subcontractor before making payments. The verification process confirms the subcontractor's identity, UTR number, and the correct deduction rate to apply.
Subcontractors do not have to register for CIS, but doing so reduces the deduction rate from 30% to 20%. The scheme covers most construction work including site preparation, alterations, dismantling, repairs, decorating, and demolition. It does not cover architecture, surveying, or the delivery of materials.
| Registration Status | Deduction Rate | Notes |
|---|---|---|
| Gross payment status | 0% | Meets HMRC's turnover and compliance tests |
| Registered with HMRC (UTR held) | 20% | Standard rate for CIS-registered subcontractors |
| Unregistered | 30% | No UTR or CIS registration with HMRC |
| Materials component | 0% | Material costs excluded from deduction base |
CIS Deduction Rates: 0%, 20% or 30%?
The rate at which your contractor deducts CIS depends entirely on your registration status with HMRC. Unregistered subcontractors face the highest rate of 30%, which can significantly reduce your cash flow throughout the year.
Registering with HMRC reduces this to 20%, saving you 10 percentage points on every payment. To register, you need a Unique Taxpayer Reference (UTR) number and can apply online through your Government Gateway account or by calling HMRC.
The best outcome is gross payment status, which means no deductions at all. To qualify, you must meet HMRC's three tests: a turnover test (minimum £30,000 annual turnover, excluding materials and VAT), a compliance test (all tax returns filed and payments made on time), and a business test (you carry out construction work in the UK or provide labour for construction work).
Are You Due a CIS Refund?
Many subcontractors overpay tax through CIS deductions. This happens when the total CIS deducted during the year exceeds your actual income tax and National Insurance liability. Common reasons include having significant allowable business expenses (tools, travel, materials, vehicle costs) that reduce your taxable profit well below the gross payments received.
To claim a CIS refund, you must file a Self Assessment tax return. HMRC will calculate your total tax liability for the year, offset the CIS deductions already paid on your behalf, and refund any overpayment. Refunds are typically processed within 4 to 12 weeks of filing.
Keep all CIS payment and deduction statements from your contractors. These show the gross amount, deduction amount, and net payment for each invoice. You will need these figures when completing the CIS section of your Self Assessment return.
HMRC processes around 38 million CIS monthly returns each year. Contractors who fail to file on time face penalties starting at £100 per month.
Keeping CIS Records and Filing Self Assessment
Contractors must submit monthly CIS returns to HMRC, detailing all payments made to subcontractors during that period. These returns are due by the 19th of each month following the tax month (which runs from the 6th to the 5th). Late filing triggers automatic penalties of £100 per month, escalating for continued non-compliance.
As a subcontractor, you must file an annual Self Assessment tax return by 31 January following the end of the tax year. The CIS section of the return requires details of all gross payments received, CIS deductions suffered, and the contractors who made those payments.
Keep invoices and receipts for all materials purchased, as material costs are excluded from the CIS deduction base. Accurate records of materials versus labour on each invoice will ensure your contractor deducts CIS only on the labour portion, maximising your take-home pay.
Common Mistakes That Cost You Money
CIS errors are costly and often avoidable. These are the most common mistakes made by both contractors and subcontractors working under the scheme.
Not registering before starting work. An unregistered subcontractor faces a 30% deduction rate instead of 20%. On a £50,000 contract, that difference is £5,000, all because of a failure to register with HMRC before the first payment. Registration takes minutes via your Government Gateway account.
Including materials in the CIS deduction base. CIS deductions apply only to the labour element of your invoice. Material costs (concrete, timber, fixings, plant hire) must be separated on each invoice and excluded from the figure your contractor deducts CIS from. Incorrect invoicing means you over-suffer CIS deductions throughout the year.
Missing the monthly return deadline as a contractor. Contractors must file a CIS monthly return by the 19th of the month following the tax month (which runs from the 6th to the 5th). Each missed return attracts an automatic £100 penalty, rising to £200 after 2 months, £300 after 3 months, and potentially much more thereafter.
Not verifying subcontractors before making payment. Contractors who pay a subcontractor without first verifying them with HMRC are personally liable if the wrong deduction rate is applied. Verification must happen before each new subcontractor relationship begins: online via Government Gateway or by phone.
Forgetting to file Self Assessment to claim CIS refunds. CIS deductions are advance payments against your annual tax liability: they do not automatically reconcile. If you have been deducted more CIS than your actual tax bill, you must file a Self Assessment return to claim the overpayment back as a refund.
Reporting to HMRC: Deadlines and Requirements
Contractors must file a monthly CIS return by the 19th of each month, covering payments made in the previous tax month (6th to 5th). The return details every subcontractor paid, the gross amount, materials deducted, and the CIS deduction applied. Filing online via Government Gateway is the most efficient method.
Subcontractors must submit an annual Self Assessment tax return by 31 January (online) to reconcile their total CIS deductions against their actual income tax and NI liability for the year. Most subcontractors with significant allowable expenses receive a refund. HMRC typically processes CIS refunds within 4 to 12 weeks of filing.
Gross payment status, which eliminates all deductions, is reviewed annually. To retain it, you must pass HMRC's compliance test (all tax returns filed and payments made on time), turnover test (minimum £30,000 net of materials and VAT), and business test. Losing gross payment status mid-year immediately triggers 20% deductions on all subsequent payments.
- Always register with HMRC before starting work: 30% is punishing compared to 20% for registered subcontractors
- Keep materials invoices separate: material costs are excluded from the CIS deduction base
- File your Self Assessment annually to reclaim any overpaid CIS deductions
- Gross payment status removes deductions entirely: requirements include clean tax compliance and sufficient turnover
- Contractors face penalties for failing to verify subcontractors before making payments
- Verify every new subcontractor via Government Gateway before their first payment: failure to verify makes you liable for any underpaid deduction
- CIS refunds are not automatic: you must file Self Assessment annually to receive them, even if HMRC already holds the overpaid tax
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