Reviewed by Mustafa Bilgic
Founder, WebCalculator
CIS deduction rates and rules from HMRC's Construction Industry Scheme guidance on GOV.UK. Estimates only — not financial or tax advice.
Under the Construction Industry Scheme (CIS), contractors deduct tax from subcontractor payments before paying them. The deduction is 20% for registered subcontractors or 30% for unregistered ones. Enter a gross payment below to see the CIS deduction and your net payment for 2026/27.
Gross payment to net
The Construction Industry Scheme requires contractors — businesses that pay subcontractors for construction work — to deduct a percentage from each payment and pass it to HMRC. The deduction is not a separate tax; it is treated as an advance payment of the subcontractor's Income Tax and National Insurance.
| Status | Rate | How to get it |
|---|---|---|
| Registered subcontractor | 20% | Register with HMRC for CIS |
| Unregistered subcontractor | 30% | Default if not registered |
| Gross payment status | 0% | Apply to HMRC; requires turnover and compliance tests |
If you are not registered, the contractor must deduct at the higher 30% rate. Registering drops this to 20% — a simple step that immediately puts more cash in your hands each month.
CIS deductions apply only to the labour element of a payment. If you supply materials, their cost is deducted from the gross figure before the CIS percentage is applied. For example, on a £3,000 invoice with £800 of materials, CIS at 20% is calculated on £2,200 of labour — a deduction of £440, not £600.
Because CIS deductions are advance payments, they offset your final tax bill. If your deductions exceed your Income Tax and NI liability for the year, HMRC refunds the difference after you file your Self Assessment tax return. Many subcontractors receive significant refunds — particularly those with high material costs or allowable expenses that reduce their taxable profit.
Contractors file a CIS300 monthly return to HMRC by the 19th of each month, reporting all payments and deductions made in the previous tax month. Late filing triggers a £100 penalty per month, increasing for repeated late returns.
To estimate your final tax bill after claiming CIS deductions back, use the self-employed tax calculator. For your overall NI position, see the Class 2 and 4 NI calculator. If you operate through a limited company, the corporation tax calculator handles the company-level calculation.
Registered subcontractors have 20% deducted from the labour portion of their payments. Unregistered subcontractors have 30% deducted. Those with gross payment status receive 0% deduction. These rates apply for 2026/27.
No. CIS deductions are only taken from the labour element of a payment. If you supply materials, their cost — backed by invoices or a reasonable allocation — is excluded before the deduction is calculated.
Yes. CIS deductions count as advance payments of tax. If you are self-employed, you offset them against your Income Tax and NI bill on your Self Assessment return. If you are a limited company, you offset them against your PAYE liabilities through your monthly EPS.
You register as a subcontractor with HMRC online or by calling the CIS helpline. Once registered, contractors who verify you will deduct at 20% instead of 30%. You can also apply for gross payment status if you meet turnover and compliance tests.
Yes. CIS deductions are not a separate tax — they are prepayments of your Income Tax and NI. At year-end you reconcile via Self Assessment. If deductions exceed your final liability, HMRC refunds the difference.