CIS for subcontractors: deductions, registering and refunds
Figures checked on gov.uk on 3 November 2026
Before CIS comes off. Leave out materials and VAT.
Roughly what should come back
£2,438
- CIS taken off: £7,360.00
- Tax and NI on your profit: £4,922.00
- Profit £31,500.00, after £3,300.00 for miles and your costs
Don’t leave £2,438 with HMRC
Your refund only comes back if your expenses and miles are on your tax return. Kev keeps them on your phone, adds up your CIS statements and shows your refund building all year. Free plan, no card needed.
Save my refund in KevWe’ll keep this result for you in Kev. Just your email, no card.
Costs: tools, workwear, phone, training, insurance. Miles at HMRC’s 55p then 25p, so leave van fuel and repairs out of costs.
A rough guide for the 2026 to 2027 tax year, at gov.uk rates. It assumes CIS work is your only income. HMRC works out the real figure from your Self Assessment return.
The Construction Industry Scheme, or CIS, is how HMRC collects tax from people working for building contractors. If you’re self-employed and do construction work for a contractor, they take some of each payment and send it to HMRC for you, as an advance on your tax and National Insurance.
Who it applies to
CIS covers sole traders, partnerships and limited companies doing construction work in the UK for a contractor, such as a building firm or developer. Work you do directly for a homeowner isn’t under CIS. Employees don’t register.
How much contractors take
| Your status | Deduction |
|---|---|
| Registered for CIS, and the contractor can verify you | 20% |
| Not registered, or can’t be verified | 30% |
| Gross payment status | Nothing taken |
Registering costs nothing and moves you from 30% to 20%, so it’s worth doing before your first CIS job.
Work out what comes off a single payment:
Work out your CIS deduction
The contractor pays you
£1,000.00
- CIS taken off: £200.00, from the labour only
- Any VAT you charge goes on top and is never deducted
That £200.00 is tax you’ve already paid
Your expenses and miles come off your profit, which is how many subcontractors get some of it back. Kev keeps them on your phone all year, ready for your tax return. Free plan, no card needed.
Start tracking freeWhat they can’t deduct from
The deduction comes off your labour. It shouldn’t be taken from:
- VAT on your invoice
- Materials you paid for
- Consumable stores, plant hire, and making or prefabricating materials
The contractor may ask for receipts for materials. Without them, they can estimate the cost, so show materials as separate lines on your invoice and keep the receipts.
How to register
You can register online if you already have a Unique Taxpayer Reference (UTR) for Self Assessment. You’ll need your legal business name and the date you started trading. If you don’t have a UTR yet, register as a new business for Self Assessment and choose “working as a subcontractor” to sign up for both at once.
Monthly statements
For each tax month you’re paid, the contractor must give you a payment and deduction statement within 14 days of the month ending. Tax months run from the 6th to the 5th. Ask for any that don’t arrive, and keep them all: they’re your proof of what’s been paid to HMRC.
Getting it back
On your Self Assessment tax return, put your total pay before deductions as income, and the total taken off as CIS deductions. HMRC works out your tax and takes off what you’ve already paid. Many subcontractors have paid more than they owe, especially once their expenses come off, and get a refund. Anything still owed is due by 31 January. Get a rough figure for your year with the free CIS refund calculator.
Gross payment status
With gross payment status, contractors pay you in full. As a sole trader you need:
- to have paid your tax and National Insurance on time in the past
- to do construction work, or supply labour for it, in the UK
- to run your business through a bank account
- at least £30,000 turnover in the last 12 months, not counting VAT or the cost of materials
You then pay all your tax through Self Assessment, so you’ll need to put money aside yourself. See how much tax to put aside.
How Kev helps
Kev keeps the rest of your tax return in order: your expenses under HMRC’s categories, your mileage, and invoices. Mark a client as a CIS contractor and pick their rate, and Kev takes the CIS off the labour on your invoices (not materials or VAT), shows the amount you’ll actually be paid, and takes the CIS already paid off what you need to put aside for tax. It’s on the free plan. If you pay subcontractors yourself, file those payments under the construction industry subcontractors category.
Common questions
How do self-employed subcontractors pay tax under CIS?
The contractor takes 20% (or 30% if you’re not registered) off the labour part of each payment and sends it to HMRC as an advance on your tax and National Insurance. You still send a Self Assessment tax return, and HMRC takes off what’s already been deducted.
Is a CIS deduction the same as a retention?
No. A CIS deduction is tax: it goes to HMRC and counts towards your tax bill. A retention is part of the contract price a customer holds back until the work is signed off, often for defects. That money is yours and is paid to you later, not to HMRC.
Can I claim expenses if I’m on CIS?
Yes. As a sole trader your business expenses, such as tools, materials you paid for and mileage, come off your profit on your tax return as normal. That’s why many subcontractors get a refund once their CIS deductions are taken into account.
How do I get my CIS deductions back?
As a sole trader or partner, send your Self Assessment return as usual: HMRC works out your tax, takes off the deductions, and refunds anything overpaid. If you stop trading part way through the year, you may be able to claim a refund sooner with form CIS40 (sole traders) or CIS41 (partners).
How does a limited company claim CIS back?
Through the company’s payroll, not the Corporation Tax return. Send the Employer Payment Summary with your year-to-date CIS deductions, and claim a refund of anything left over after the end of the tax year.
Sources
This is general guidance, not tax advice. Rules can change, so check gov.uk or ask an accountant about your own situation.
See your CIS refund build up
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