CIS Deductions Explained for UK Subcontractors (2026)

If you work as a subcontractor in construction, you've probably had CIS deductions taken from your invoices. Most subcontractors don't fully understand how CIS works — which is a problem, because they end up overpaying tax.

What is CIS?

The Construction Industry Scheme (CIS) is HMRC's way of collecting tax from people working in construction. If you work for a contractor (a builder, a developer, a construction company), they may deduct tax from your invoices at source and pay it directly to HMRC.

You're not an employee — you're still self-employed — but the contractor acts as a tax collector.

How much gets deducted

There are three rates:

• 20% (standard) — if you're registered with HMRC as a subcontractor.
• 30% (higher rate) — if you're not registered (or HMRC has gross-paid you).
• 0% — if you've applied for and received a CIS verification that confirms gross payment status.

The 30% rate exists to encourage subcontractors to register. If you haven't, register — it's free and takes 5 minutes.

How to register for CIS

1. Phone HMRC on 0300 200 3210. They'll ask for your UTR (Unique Taxpayer Reference) and business details.
2. They confirm your registration, usually within a week or two.
3. You can then give your CIS details to each contractor you work for.

Without a UTR, you can't register for CIS. You get a UTR when you register for Self Assessment (or if you're a Ltd company director, you already have one).

What the contractor does with the deduction

When the contractor pays your invoice, they:

1. Deduct 20% (or 30% or 0%) from the gross amount.
2. Pay the net to you.
3. Pay the deducted amount to HMRC by the 19th of the following month.
4. Issue you with a CIS statement (formerly a CIS25) showing the deduction.

You should keep these CIS statements — they prove how much tax was already paid on your behalf.

How CIS affects your Self Assessment

Here's the part most subcontractors get wrong. CIS deductions are NOT extra tax — they're tax you've already paid.

When you file your Self Assessment, you:

1. Calculate your total profit (income minus expenses).
2. Calculate the income tax and Class 4 NIC due on that profit.
3. Subtract any CIS deductions you've already paid throughout the year.
4. Pay the difference to HMRC (or get a refund if you overpaid).

For example:

• Total invoice income: £30,000
• Expenses: £5,000
• Profit: £25,000
• Income tax + Class 4 NIC due: £4,000
• CIS already deducted: £6,000
• Refund from HMRC: £2,000

This is why CIS-registered subcontractors often get a tax refund in January. They've been over-paying tax throughout the year via CIS deductions.

Common mistakes

1. Not registering for CIS. Costs you 10% extra in deductions every job. Register for free.
2. Forgetting to claim CIS deductions at Self Assessment. This is the biggest mistake. If you don't enter your CIS deductions, HMRC will tax your full profit again — and you'll pay tax on tax.
3. Not keeping CIS statements. If you can't prove what was deducted, you'll struggle to claim it back.
4. Including CIS-deducted invoices in turnover twice. Don't include the gross amount in your turnover AND the deduction as a separate expense. It's one or the other.

How GraftLog helps

If you're a CIS subcontractor, you should track every invoice and mark it as CIS-deducted. GraftLog records the gross invoice, the CIS deduction, and the net received. At year-end, you export a CSV showing:

• Total CIS-deducted income.
• Total CIS tax paid (with reference to the contractor's CIS statements).
• Net income actually received.

Hand that to your accountant and they'll claim the refund without any faff.

Track CIS invoices in GraftLog →