CIS guides

The Construction Industry Scheme is the other tax rule that trips many trades who work on building sites. It decides what is taken off your pay when you are a subcontractor and what you must keep back when you pay another trade. The notes below are the three things to hold in your head. They were read on gov.uk on 24 October 2026 and the links are at the foot.

Three things to know before anything else

First, CIS is on labour only. Materials the subcontractor paid for directly sit outside the deduction. VAT on the invoice sits outside too. Fuel used other than travel, plant hire and similar costs the subcontractor paid for directly are also outside where the subcontractor can show them. You cannot deduct a guess for materials where none were supplied. A labour only job is wholly liable.

Second, there are three deduction rates. HMRC tells the contractor which one to use when the contractor verifies the subcontractor. Registered subcontractors are 20 percent. Unregistered are 30 percent. Gross payment status is 0 percent and no deduction is made, but the payment is still recorded. The deduction is an advance towards the subcontractor’s tax and National Insurance. The contractor must pay it to HMRC.

Third, every payment needs a paper trail. The contractor must give the subcontractor a payment and deduction statement within 14 days of the end of each tax month. The CIS tax month runs from the 6th of one month to the 5th of the next. The contractor files the return by the 19th of that month, even if it is a nil return. Keep that statement for your own tax.

Private householders and the small job question

Private householders are not contractors for CIS. Work you do for a homeowner in their own home is outside CIS. That is why a small domestic job often has no CIS. It is not a threshold. It is a status. If you are a contractor and your client is a contractor, payments between you can still be inside CIS even when the end customer is a householder. Read the pages linked in Sources for the line between the two.

There is no £1,000 CIS registration threshold. A business is a contractor if it pays subcontractors for construction work, or if it does not do construction work but has spent more than £3 million on construction in the last 12 months.

How the deduction is worked out

Start with the gross amount for the work. Take off VAT shown on the invoice. Take off the direct cost of materials the subcontractor paid for and can evidence. What is left is the amount liable to the deduction. Apply the rate HMRC gave for that subcontractor.

Example. Gross £1,000. Materials £200. VAT nil. Labour liable is £800. At 20 percent the deduction is £160. The subcontractor is paid £840. HMRC holds the £160. Same job at 30 percent: deduction £240 and paid £760. Same job at 0 percent: no deduction and the full gross is paid. Those figures are the method in words so you can check the calculator.

Calculators for CIS

• CIS calculator: work out CIS deductions at 20 percent, 30 percent and 0 percent, on labour only, with materials and VAT shown outside the deduction.

The page carries a table of ready worked amounts and the notes on what can be taken off.

Templates for CIS

• Invoice template: a worked invoice with the CIS block. Labour £1,400 at 20 percent gives £280 deducted. Materials £600 is outside. Payable after CIS £2,120. The app’s own builder produces this block only when CIS is on and the customer is a CIS contractor.
• Statement of account template: what one customer owes across all jobs, dated and signed, helpful when a contractor asks for a summary across months.
• Payment reminder template: the chase in message form, one thing per line, with the balance owed rather than the total on the invoice.

Each specimen shows where the CIS figures sit on the paper so you can copy the layout.

Posts on CIS

Each post carries its own key facts box at the top and a sources list at the foot. The figures are those gov.uk gave on the day the post was checked.

• CIS deductions explained: the three rates, the materials rule, and why a labour only invoice is wholly liable.
• How to work out job profit: income less costs for the job, with the CIS advance treated as tax already paid.
• Self Assessment for solo traders: where the CIS statement sits in your return and what to keep for the year.

Related pages in the app

• Tax: the estimate that treats CIS already deducted as a credit towards the bill.
• Making Tax Digital: the quarterly updates and what you must keep if you are in scope.
• Reports: the year and what you are owed. The page includes CIS in the tax and VAT section where it applies.
• Expenses: the thirteen categories and the receipt read, where the receipt date is the day you paid.

Sources

CIS rates and rules read on gov.uk on 24 October 2026.

Latest from the blog

The newest posts on CIS sit here with the newest first. Until they are live the list below is planned and will appear as each post is published.

• CIS deductions explained: the 20, 30 and 0 percent rates on labour, with materials and VAT outside.
• How to work out job profit: how the CIS advance sits in profit and tax.
• Self Assessment for solo traders: what to do with CIS statements across the tax year.

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