CIS
How to check a CIS deduction on your invoice
A contractor pays you less than you invoiced, the payslip says CIS, and you take their word for it because the alternative is an argument you are not sure you would win. Here is how the number is supposed to be worked out, what you are legally owed in writing every month, and how to get the money back at the end of the year.
For UK subcontractors · Checked against CIS340 on 23 August 2026 · About 7 minutes
The rate is rarely wrong, the base usually is
Almost nobody gets the percentage wrong. It is 20% if you are registered under the Construction Industry Scheme, 30% if you are not, and nothing if you hold gross payment status. Those three numbers are easy and contractors apply them correctly.
What goes wrong is the figure the percentage is applied to. Plenty of contractors, and most of the bookkeeping done in a van on a Sunday, take the percentage off the invoice total. That is not the rule, and on a job with real materials in it the difference is not small.
What comes off before the percentage
CIS340 paragraph 3.12 lists what the contractor must take off the gross payment before working out the deduction. It is the amount you actually paid, not a round number and not an estimate.
- Materials, where you bought them yourself for that particular contract
- Consumable stores
- Fuel, with one exception: fuel for travelling does not count
- Plant you hired in from someone else, including the fuel to run it
- The cost of manufacturing or prefabricating materials
- VAT, which sits outside the calculation altogether
Two of those have a catch worth knowing, because they are where the money quietly goes missing.
A worked example, and the £120 nobody notices
One job, carried through so the numbers stay in view. You are registered, so your rate is 20%. You invoice £2,400 excluding VAT for a job where you bought £600 of materials yourself.
| Done correctly | Done on the invoice total | |
|---|---|---|
| Invoice, excluding VAT | £2,400 | £2,400 |
| Materials you paid for | less £600 | not taken off |
| Figure the rate applies to | £1,800 | £2,400 |
| Deduction at 20% | £360 | £480 |
| You are paid | £2,040 | £1,920 |
£120, on one job. It is not lost forever, because it lands against your tax bill at the end of the year, but it is your money sitting with HMRC for up to twenty months instead of in your account this week. Repeat it across a year of subcontract work and it is a genuine cash flow problem produced entirely by arithmetic.
You are owed a statement every month, in writing
You do not have to ask nicely for the paperwork. If a contractor has deducted from you, they owe you a written statement, and there is a deadline on it.
6th of the month
The tax month begins. Payments made from here fall into this month.
5th of the next month
The tax month ends.
By the 19th
Your statement should be with you: 14 days after the 5th.
31 January
The Self Assessment deadline where the year's deductions finally come off your bill.
The statement has to show four things, and it is worth checking all four:
- The contractor's name and their employer tax reference
- The gross amount of the payments made to you
- The cost of any materials
- The amount of the deduction
That third line is the one to look at hardest. If the materials figure is blank on a job where you supplied materials, the deduction underneath it is almost certainly too big.
When the statements never come
Some contractors are simply disorganised, and a polite chase fixes it. Send something short that makes it easy to say yes to.
Hi [name],
Could you send over the CIS payment and deduction statements for [month or job]? I need them for my Self Assessment and I am missing them from [date] onwards.
No rush on anything else, just the statements when you get a minute. Thanks.
[your name]
If they still do not arrive, you are not stuck and you do not lose the money. Write to HMRC instead. They can set the deductions against your bill without the contractor's paperwork, provided you can tell them what was paid and when.
Your full name and address
Your Unique Taxpayer Reference (UTR)
The contractor's name, address and, if you have it, their employer tax reference
The dates of the payments they made to you
The amounts paid, and the deductions taken, as far as you can evidence them
Keep whatever you do have alongside it: the invoices you issued, remittance advice, bank statements showing what actually landed. The gap between what you invoiced and what was paid is itself evidence of the deduction.
Not registering costs you ten percent for nothing
If you are not registered under the scheme, contractors must deduct 30% rather than 20%. You are not in trouble and nothing else about the work changes. You are just handing over an extra ten percent of your labour on every job and waiting until January to see it again.
| Rate | What it means for you | |
|---|---|---|
| Registered | 20% | The ordinary position for most subcontractors. Registration is free. |
| Not registered | 30% | An extra ten percent of your labour, held until you file. |
| Gross payment status | 0% | Paid in full, and you settle the tax yourself. Has to be applied for and held. |
What changed in April 2026
The scheme changed on 6 April 2026, and a good deal of the advice still online describes the version before that. Most of it tightens the rules around gross payment status.
- Gross payment status can now be cancelled immediately where there is fraud, false information at registration, an incorrect return made fraudulently, or a knowing failure to meet a CIS obligation
- Where status is removed that way, the wait before reapplying went from one year to five
- A business involved in a transaction connected to fraud can be made liable for the lost tax, with a penalty of 30% of it, and that penalty can reach directors and connected persons
- Payments to subcontractors who are local authorities or public bodies are now outside the scheme
- Contractors must file a nil return or tell HMRC when they have not paid any subcontractors, with a penalty for doing neither without a reasonable excuse
For most subcontractors none of this changes the sum on your statement. It matters if you hold gross payment status, where the consequences of a slip are now considerably heavier and take five years rather than one to undo.
Getting it back at the end of the year
The deductions are not a tax. They are payments on account of a tax you have not worked out yet, and for most subcontractors on 20% they add up to more than the eventual bill.
As a sole trader you put the full invoice amounts through as income, before any deduction, and then enter the year's deductions in the CIS deductions field on your Self Assessment return. HMRC calculates your tax and National Insurance and takes the deductions off the total. If that leaves you overpaid, you are due a refund.
Four things go wrong at this stage, and all four are avoidable:
- Recording the net amount you were paid as your income, rather than the gross you invoiced
- Throwing away statements once the return is filed, leaving nothing to answer a query with
- Assuming a missing statement means a lost deduction, when HMRC will accept the evidence directly
- Leaving registration undone for another year and financing HMRC at thirty percent in the meantime
The checking is arithmetic, so stop doing it by hand
Every figure in this guide comes off paperwork you already produce: what you invoiced, what you paid for materials, what actually landed. My Job Goblin keeps the labour and materials split on every job, so the figure the deduction should have been calculated on is already there when the statement arrives, and the year's totals are ready when the return is due.
This is general information about how the Construction Industry Scheme works, checked against HMRC's CIS340 guidance on 23 August 2026. It is not tax advice, and it cannot take account of your own circumstances. If a contractor disputes a deduction or your position is unusual, speak to an accountant or contact HMRC directly.