Work out the exact Construction Industry Scheme deduction on any payment — and what actually lands in the bank. UK rates for 2026/27.
CIS is deducted from the labour element only, after VAT and after materials, plant hire, fuel and consumables you paid for. The deduction isn't lost — it counts towards your tax bill (see below). This calculator is a guide, not tax advice.
Same job, three very different bank transfers — £300 a job between registered and not. Registration is free and takes minutes on gov.uk.
The Construction Industry Scheme (CIS) is HMRC's system for collecting tax from construction work as it happens, instead of waiting for a tax return. When a contractor pays a subcontractor, they must deduct a slice of the labour charge and send it straight to HMRC. That slice is the CIS deduction.
The three rates. If you're registered for CIS, the contractor deducts 20% of your labour. If you're not registered — or the details you gave don't match HMRC's records — they must deduct 30%. If you've been approved for gross payment status, nothing is deducted and you settle all your tax later through Self Assessment or Corporation Tax.
It's labour only. The deduction never applies to materials, plant hire, fuel or consumables that you paid for directly, and never to VAT. That's why your invoices should always split labour and materials — lump them together and you risk being deducted on the lot.
The money isn't lost. Every CIS deduction is an advance payment towards your Income Tax and National Insurance. Sole traders claim it back (or offset it) through Self Assessment — for many subbies the deductions add up to more than the final bill, which means a refund. Limited companies offset deductions through payroll and reclaim any excess after the tax year. The catch: you can only claim what you can evidence, so keep every payment and deduction statement — contractors must give you one within 14 days of the end of each tax month.
Getting on the 20% rate. Register as a CIS subcontractor with HMRC (you'll need your UTR — Unique Taxpayer Reference — and National Insurance number). Then give every contractor your details exactly as HMRC holds them. A mismatched name or UTR is the most common reason people get stuck on 30%.
Going gross (0%). Gross payment status means full payment, no deductions, better cashflow. To qualify you apply to HMRC and pass three tests: your business does construction work in the UK and is run through a bank account; your construction turnover (excluding materials and VAT) is at least £30,000 a year as a sole trader (higher thresholds for partnerships and companies); and your tax affairs are up to date. HMRC reviews it annually — late returns can lose you the status.
If you're the contractor. You must register before paying your first subbie, verify each subcontractor with HMRC (that's what fixes their rate), file a monthly CIS300 return by the 19th, give deduction statements, and pay the deductions over by the 22nd (electronic). Miss the return and there's an automatic £100 penalty that grows the longer it's outstanding. Many trades are both contractor and subcontractor at once — you need to register as both.
Three rates: 20% for subcontractors registered with HMRC under CIS, 30% for those not registered or not verifiable, and 0% for subcontractors holding gross payment status. The deduction applies to the labour element of the payment only.
No. CIS applies only to labour. Materials, plant hire, fuel and consumable stores you paid for directly are taken out before the deduction is calculated, and VAT is excluded too. Always split labour and materials on your invoices.
Gross payment, minus VAT, minus materials/plant/fuel you paid for = the labour element. Apply the rate to that. Example: £1,000 labour + £400 materials at 20% → £200 deducted, £1,200 paid to you.
Yes — they're advance payments of your Income Tax and National Insurance. Sole traders reclaim or offset them through Self Assessment; limited companies offset through payroll (EPS) and reclaim any excess after the tax year. Keep every deduction statement as evidence.
HMRC approval to be paid with no deduction at all (0%) — you settle tax later instead. You need to pass the business test, the turnover test (£30,000+ construction turnover for a sole trader, ex materials and VAT) and the compliance test. HMRC reviews it every year.
Either you're not registered for CIS, or the contractor couldn't verify you — usually because the name, UTR or NI number you gave doesn't exactly match HMRC's records. Register, then give contractors your details exactly as registered.
Contractors must register before taking on their first subcontractor. Subcontractors aren't legally forced to, but unregistered subbies are deducted at 30% instead of 20% — so in practice everyone should. Many businesses are both, and must register as both.
The monthly CIS300 return is due by the 19th of each month for the tax month just ended, with payment by the 22nd if electronic. A late return means an automatic £100 penalty that increases the longer it's outstanding.
Saved subcontractors with their rates, a full CIS audit log, cert expiry alerts, quotes, invoices, expenses, mileage and a live tax estimate — built for UK trades on CIS, from £29/month.
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