CIS deductions, and how to get yours back
If you're a subbie, your contractor takes 20% off every invoice before you see a penny. Most of that comes back at the end of the year - if you claim it right. Here's how CIS works, in plain English.
THE SHORT VERSION
The Construction Industry Scheme (CIS) means contractors take 20% off a subcontractor's labour before paying them, and send it to HMRC as an advance on their tax. Because it's taken off the top - before expenses and your personal allowance - most subcontractors overpay, and get money back when they file their tax return.
WHAT IS THE CONSTRUCTION INDUSTRY SCHEME?
CIS is HMRC's way of collecting tax from construction workers as they earn, rather than waiting for a tax return. It applies to most construction work in the UK - building, alterations, repairs, demolition, decorating, and civil engineering.
Under the scheme, the contractor who pays you has to deduct money from your invoice and pass it to HMRC. That deduction counts as an advance payment towards your tax and National Insurance.
In practice it means three things:
- check_circleYour contractor deducts 20% (or 30%) from the labour part of your invoice
- check_circleThat money goes to HMRC and sits against your name as tax already paid
- check_circleEverything gets settled up when you do your Self Assessment - usually with a refund
Who counts as a subcontractor?
Anyone doing construction work for a contractor rather than directly for a homeowner. If you're a self-employed sparky, chippy, plasterer, brickie or groundworker doing jobs for a builder, a developer or another firm, you're a subcontractor under CIS. Work you do directly for private householders isn't covered - no deduction there.
WHERE YOUR MONEY GOES
A £1,000 labour invoice at the 20% rate. The deduction isn't lost - it's your money, parked with HMRC until the year end.
For labour on the job. Materials are invoiced separately - no deduction on those.
Your contractor deducts 20% and sends it to HMRC. It sits against your name as tax already paid.
What actually lands in your bank. You should get a payment and deduction statement every month.
File your tax return and the deductions are set against your real bill. For most subbies, HMRC owes you.
THE THREE CIS RATES
How much gets deducted depends on one thing: whether you're registered, and how.
The penalty rate. If HMRC can't verify you, your contractor has to take nearly a third. Registering fixes this in one phone call or online form.
The standard rate once you're registered for CIS. Taken off labour only, and settled against your real tax bill at the year end.
Paid in full, no deductions. You have to apply and pass HMRC's tests - and you pay all your tax yourself at the year end.
Deductions come off labour only
CIS is deducted from the labour part of your invoice, not materials. If you bill £1,500 for a job that's £1,000 labour and £500 materials, the deduction is £200, not £300. Split them out on every invoice - lumping it all together means the contractor deducts from the lot, and you're lending HMRC even more of your money.
WHY MOST SUBBIES ARE OWED A REFUND
The 20% comes off the top of everything you earn, from the first pound. But your actual tax bill is worked out after your personal allowance and after your expenses - the van, fuel, tools, insurance, phone.
So HMRC has been holding tax on money you were never going to be taxed on. That gap is your refund - the "CIS rebate" the ads go on about - and for a typical subbie it runs to a couple of thousand pounds a year.
Illustration using 2026/27 rates and a £12,570 personal allowance. Your numbers will differ - the point is the shape: deducted at 20% of turnover, taxed on profit.
The catch: no expenses, no refund
HMRC won't work this out for you. Your refund only exists if you claim your expenses on your tax return, and you can only claim what you've got a record of. Every Screwfix receipt you lose is money left with HMRC.
You still do a tax return
CIS deductions don't replace Self Assessment - they feed into it. You file after 5 April like every other sole trader, declare your income and expenses, and your deductions are set against the bill. That return is where the refund comes from. File early and the refund lands early - HMRC usually pays out within a few weeks. And if your turnover is over the Making Tax Digital threshold, quarterly updates apply to you too - see our MTD guide.
HOW TO REGISTER FOR CIS
Register as self-employed first
If you haven't already, register for Self Assessment on GOV.UK. That gets you a UTR - your Unique Taxpayer Reference - which you need for the next step.
Register for CIS as a subcontractor
Online through your Government Gateway account, or by calling the CIS helpline. You'll need your UTR and National Insurance number. This is what drops you from 30% to 20%.
Give every contractor your details
Before they first pay you, a contractor has to verify you with HMRC. Give them your name, UTR and NI number exactly as HMRC holds them - a mismatch means the 30% rate.
Keep every deduction statement
Contractors must give you a payment and deduction statement each month they pay you. Those statements are your proof of tax paid - chase any that don't turn up.
WHAT IS GROSS PAYMENT STATUS?
Gross payment status means contractors pay you in full - no deductions at all. You get your cash flow back, and you pay all your tax through Self Assessment like any other business.
You have to apply, and HMRC checks three things:
- check_circleYou've done construction work in the UK and run the business through a bank account
- check_circleYour labour turnover is at least £30,000 as a sole trader (ignoring materials and VAT)
- check_circleYour tax returns and payments have been on time - HMRC reviews this every year
It's worth having if cash flow is tight and your compliance record is clean. But there's no refund cushion at the year end - the tax bill is all yours to save for, so the record keeping matters even more.
HOW BOSH GETS YOUR MONEY BACK
Your refund is only as big as your records. Bosh keeps them without you thinking about it.
1. Connect your bank
Link your account with Open Banking and every payment lands in Bosh automatically - including what came in short after the CIS deduction. Read-only, we can't move your money.
2. Every expense captured
Screwfix, Toolstation, fuel, materials, insurance - every transaction categorised as it happens. That's the expense evidence your refund is built on, done for you.
3. Refund-ready return
See what HMRC owes you build up through the year, not as a January surprise. When it's time to file, everything's already in place - a couple of taps and it's claimed.
From £3.99 a month. Cancel any time.
CIS QUESTIONS
The things people actually ask us about CIS.
What is CIS in simple terms?
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It's HMRC collecting tax from construction workers as they earn. The contractor who pays you takes 20% (or 30%) off the labour part of your invoice and sends it to HMRC as an advance on your tax. It all gets settled when you file your tax return - and because it's taken before expenses and your personal allowance, most subcontractors get money back.
Do I have to register for CIS?
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You don't legally have to, but not registering costs you. Unregistered subcontractors are deducted at 30% instead of 20%. Registering is free, takes minutes, and drops your rate immediately.
How do I register for CIS as a subcontractor?
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First register for Self Assessment on GOV.UK to get your UTR. Then register for CIS online through your Government Gateway account or by calling the CIS helpline - you'll need your UTR and National Insurance number.
Is CIS deducted from materials?
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No. Deductions only apply to the labour part of your invoice. If you split labour and materials out on the invoice, the contractor deducts from labour only. If you lump it together, they may deduct from the whole amount - so always itemise materials.
How do I claim my CIS refund?
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Through your Self Assessment tax return. You declare your income and expenses, enter the CIS deducted from your payment and deduction statements, and HMRC sets what you've already paid against your actual bill. If you've overpaid, the difference is refunded - usually within a few weeks of filing.
When do I get my CIS refund?
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After you file your tax return for the year, which you can do any time from 6 April. File in April or May and the refund typically lands within two to six weeks. Wait until January and you'll wait longer - HMRC's busiest season.
How much CIS refund will I get?
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It depends on your income, expenses and personal allowance. A subbie invoicing £40,000 in labour with £7,000 of expenses would typically be owed around £2,700. The more expenses you record and claim, the bigger the refund - and unclaimed expenses are money left with HMRC.
Can I claim CIS refunds for previous years?
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Yes. If you've overpaid in earlier years and never claimed, you can generally go back up to four tax years. Each year needs its own tax return or claim, and you'll need the payment and deduction statements to back it up - another reason to keep every one.
What's the difference between CIS and PAYE?
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PAYE is for employees - tax collected through a payroll, with holiday pay and employment rights attached. CIS is for self-employed subcontractors - a flat deduction off labour, no employment rights, and you file your own tax return. If a firm controls your hours and tools but pays you through CIS, your employment status is worth checking.
Do I still do a Self Assessment tax return?
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Yes. CIS deductions are advance payments, not a replacement for a return. The tax return is where your real bill is worked out and where the refund comes from. No return, no refund.
What is gross payment status?
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It lets contractors pay you in full with no deductions. You have to apply and pass HMRC's tests - broadly, £30,000+ of labour turnover as a sole trader, a business bank account, and a clean record of filing and paying on time. You then pay all your tax yourself through Self Assessment.
Does CIS apply to limited companies?
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Yes, but it works differently. A limited company subcontractor has deductions taken the same way, but offsets them against its PAYE and CIS liabilities during the year rather than waiting for Self Assessment. This guide covers sole traders - if you've incorporated, the mechanics change.
Stop guessing what HMRC owes you
Bosh tracks every deduction and every expense in the background, so your refund is claimed in full - not left sitting with HMRC. Tax sorted. Job done.
Get started freeThis guide is general information about the Construction Industry Scheme, not tax advice for your particular situation. Rates and rules are as published by HMRC. For the official detail see GOV.UK.