THE CIS GLOSSARY

THE TERMS, PLAIN AND SIMPLE

CIS (Construction Industry Scheme)

HMRC's system for collecting tax from construction work as it happens: contractors deduct a slice of subcontractors' labour payments and pass it to HMRC as an advance on the subbie's tax.

Contractor

A business that pays subcontractors for construction work. Must register for CIS, verify subbies, deduct correctly, file monthly returns and issue statements.

Subcontractor

A business or sole trader paid by a contractor to do construction work. Registering for CIS moves you from the 30% deduction rate to 20%.

CIS300

The contractor's monthly CIS return to HMRC, due by the 19th of each month, covering the tax month just ended (6th to 5th). Nil returns are still required.

UTR (Unique Taxpayer Reference)

Your 10-digit HMRC reference. Contractors need a subbie's UTR to verify them — a mismatch is the most common reason for being stuck on 30%.

Verification

The contractor's check of a subcontractor with HMRC before first payment. HMRC returns the deduction rate to apply and a verification reference.

Standard rate (20%)

The CIS deduction rate for subcontractors registered with HMRC.

Higher rate (30%)

The deduction rate for subcontractors who are unregistered, or whose details could not be matched to HMRC's records.

Gross payment status (0%)

HMRC approval to be paid with no CIS deduction. Requires passing the business, turnover (£30,000+ construction turnover for sole traders, ex materials and VAT) and compliance tests; reviewed annually.

Labour element

The part of a payment CIS is deducted from — the gross payment minus VAT and minus materials, plant hire, fuel and consumables the subcontractor paid for.

Payment & deduction statement

The statement a contractor must give each deducted subcontractor within 14 days of the tax month ending. It is the subbie's evidence for reclaiming the deduction.

Domestic Reverse Charge (DRC)

The VAT rule for most construction services between VAT-registered businesses in the CIS chain: the customer accounts for the VAT instead of the supplier charging it.

EPS (Employer Payment Summary)

The payroll submission limited companies use to offset CIS deductions suffered against their PAYE/NI liabilities.

Self Assessment

The annual tax return where sole-trader subcontractors declare income and reclaim or offset CIS deductions — often producing a refund.

AMAP (Approved Mileage Allowance Payments)

HMRC's approved mileage rates: for 2026/27, 55p/mile for cars and vans on the first 10,000 business miles, then 25p; 24p motorcycles; 20p bicycles.