What is the CIS deduction for subcontractors?

Under the Construction Industry Scheme (CIS), a contractor deducts tax from payments to a subcontractor for labour and pays it to HMRC. The standard deduction is 20% for a registered subcontractor, 30% if unregistered, and 0% with gross payment status.

What the deduction is taken from

The deduction applies to the labour part of the payment. It does not apply to VAT, and not to the cost of materials you supply and can evidence. Check HMRC guidance for the detail.

What happens to the deduction

The contractor pays it to HMRC and gives you a payment and deduction statement. The deductions are then counted against your own tax and National Insurance bill.

On your invoices and applications

Your invoice or application should show the gross amount, the CIS deduction and the net you will receive, so the figures match what the contractor pays.

Open the free CIS deduction calculator.

Common questions

What are the CIS rates?

20% for a registered subcontractor, 30% for an unregistered one, and 0% if you have gross payment status.

Is VAT included in the CIS deduction?

No. The deduction is worked out on the labour element excluding VAT, and excluding materials you supply and can evidence.

This page is general information for UK construction subcontractors and is not legal advice. Contracts differ, so check yours, and take advice on a specific dispute.