CIS deductions explained: a plain-English guide for UK trades

The Construction Industry Scheme (CIS) means contractors take money off subcontractors' payments and pass it to HMRC as an advance on the subcontractor's tax and National Insurance.

The rates

• 20% if the subcontractor is registered for CIS
• 30% if they aren't registered, or HMRC can't verify them
• 0% if they have gross payment status

What it's taken from

Only the labour part of the payment. Don't deduct from VAT, materials the subcontractor bought for the job, or the CITB levy.

Worked example

A registered subcontractor invoices £1,000 labour and £400 materials. The deduction is 20% of £1,000 = £200, so the contractor pays £1,200 and passes £200 to HMRC.

Deadlines for contractors

Tax months run from the 6th to the 5th. The monthly return is due by the 19th, and the deduction must be paid by the 22nd (if paying electronically). From 6 April 2026, if you paid no subcontractors in a month you need to file a nil return, unless you told HMRC in advance. A return 1 day late costs £100.

Keep track easily

Our CIS Subcontractor Deduction Tracker (£8 + VAT) applies the rate to labour only, works out the net payment and totals each tax month for your return. Or start with the free one-page cheat sheet.

Get the free CIS Cheat Sheet See the templates

General information, not tax or legal advice. Checked against GOV.UK on 21 October 2026. Rules change, so check GOV.UK or ask an accountant.