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CIS guide

CIS contractor guide (UK)

A practical, plain-English guide to CIS deductions, monthly returns, and the records that keep contractors and subcontractors compliant.

CIS Construction HMRC

Updated 5 February 2026

CIS contractor guide (UK)

The Construction Industry Scheme (CIS) is one of those systems that’s straightforward in theory and awkward in practice—especially when paperwork is scattered across email, WhatsApp, and job sheets.

This guide gives you a clear overview of what CIS is, what records to keep, and where problems usually creep in.

Who this is for

  • Contractors who pay subcontractors for construction work and have CIS responsibilities
  • Subcontractors who have CIS deductions taken from their payments
  • Anyone working in construction who wants cleaner records and fewer HMRC headaches

CIS in plain English

  • Contractors verify subcontractors, apply the right deduction rate, submit monthly CIS returns, and provide deduction statements.
  • Subcontractors receive payments with tax deductions (in many cases) and keep CIS statements as evidence of tax already deducted.

CIS doesn’t replace normal bookkeeping—it sits alongside it.

Common CIS deduction rates (general)

CIS deductions are commonly made at:

  • 20% (registered subcontractor)
  • 30% (not registered)
  • 0% (gross payment status, if approved)

The correct rate depends on verification and status—don’t assume.

Contractor checklist: setup and verification

  • Confirm you are registered as a CIS contractor (where required)
  • For each subcontractor:
    • Collect their details (name, trading name, UTR where applicable)
    • Verify with HMRC before the first payment (and keep evidence)
    • Record the agreed labour/material split (CIS typically applies to labour)

Good systems prevent the classic issue: applying the wrong rate because verification was skipped.

Contractor checklist: what to record for each payment

For each subcontractor payment, keep:

  • Invoice / application for payment
  • Date paid and method (bank transfer reference helps)
  • Split between:
    • labour
    • materials
    • VAT (if they are VAT-registered)
  • CIS rate used and deduction calculated
  • Any adjustments (credit notes, rework, retention)

If you’re not consistently capturing the labour/material split, your CIS deductions can drift out of line.

Contractor checklist: monthly CIS return rhythm

A calm monthly process usually includes:

  • Reconcile payments made to subcontractors during the month
  • Confirm deduction calculations are correct
  • Submit the CIS return by the required deadline (deadlines can be strict)
  • Provide subcontractors with CIS deduction statements
  • File the monthly return confirmation and supporting reports

If you have no payments in a month, you may still need to submit a nil return depending on your situation.

Subcontractor checklist: the records you should keep

  • CIS deduction statements from each contractor
  • Invoices you issued
  • Bank statements / remittance advice showing what was paid
  • A summary of labour, materials, and VAT (if applicable)
  • Notes of any missing or late statements (who to chase)

Your CIS statements matter because they support the tax already deducted at source.

Subcontractor checklist: year-end prep

  • Total gross income from construction work
  • Total allowable business expenses (with evidence)
  • Total CIS tax deducted (from statements)

CIS deductions are not always your final tax bill—they’re tax paid on account. Your final position depends on your overall income and expenses.

Typical CIS pitfalls

  • Missing statements → you can’t evidence deductions properly.
  • Wrong labour/material split → incorrect deductions.
  • VAT confusion → VAT and CIS interact, but they’re not the same thing.
  • Using personal accounts → makes CIS tracking far harder.
  • Last-minute monthly returns → increases errors and stress.

When to get help

Consider support if:

  • you’re taking on more subcontractors and admin is ballooning
  • you’ve had HMRC queries about CIS rates, verification, or late returns
  • you want to integrate CIS into a clean bookkeeping workflow

Disclaimer

This guide is general information, not tax advice. CIS rules and deadlines depend on your circumstances and can change. If you’re unsure, check HMRC guidance or ask for tailored advice.

If you’d like help setting up a simple CIS workflow (verification, deductions, monthly rhythm), Jeremy can talk it through and recommend a straightforward approach.

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