What is the Construction Industry Scheme (CIS)?

CIS is an HMRC scheme where contractors in the construction industry must deduct tax from payments to subcontractors and pass it to HMRC. It applies to most construction work in the UK including building, alterations, repairs, decorating, demolition and civil engineering. The deductions count as advance payments towards the subcontractor's tax and National Insurance.

What is the CIS deduction rate?

There are three rates: 20% for registered subcontractors (verified by HMRC), 30% for subcontractors who are not registered or cannot be verified, and 0% for those with gross payment status. Most subcontractors are on the 20% rate. The 30% rate applies to anyone the contractor cannot verify with HMRC.

Are materials excluded from CIS deductions?

Yes. The cost of materials the subcontractor has directly purchased for the job is deducted from the gross payment before calculating the CIS deduction. Only the labour element (gross minus materials) is subject to CIS tax. You should provide invoices or receipts for materials to support the deduction.

How do I register for CIS?

You can register as a subcontractor with HMRC online or by calling the CIS helpline (0300 200 3210). You will need your UTR (Unique Taxpayer Reference) number and National Insurance number. Registration moves you from the 30% deduction rate to 20%, saving you significant tax on every payment.

What is gross payment status and how do I get it?

Gross payment status means you receive payments without any CIS deductions (0% rate). To qualify, you must meet three tests: a business test (you run a construction business in the UK), a turnover test (minimum £30,000 annual turnover excluding materials and VAT, or £30,000 per partner), and a compliance test (good record of filing tax returns and paying tax on time). Apply to HMRC.

Does CIS apply to domestic homeowners?

No. CIS only applies when the payer is a contractor or deemed contractor in the construction industry. If you are a homeowner hiring a tradesperson for work on your own home, CIS does not apply. However, property developers, housing associations and some large businesses may be deemed contractors under CIS rules.

TradeCalcs

CIS Tax Deduction Calculator — How Much CIS Tax Will Be Deducted?

Calculate the Construction Industry Scheme (CIS) tax deduction from your subcontractor payment. Enter your gross payment, registration status and materials cost.

Gross Payment

Total invoice amount before CIS deduction

Materials Cost

Cost of materials supplied by the subcontractor (excluded from CIS)

CIS Registration Status

Select your CIS registration status with HMRC

How We Calculate This

This calculator works out the CIS tax deduction that a contractor must withhold from a subcontractor payment, based on the gross payment amount, CIS registration status, and materials cost.

Calculation Formula

Taxable amount = Gross payment - Materials cost
CIS deduction = Taxable amount x CIS rate
Net payment = Gross payment - CIS deduction

CIS Deduction Rates

Registered (verified): 20%
Not registered / unverified: 30%
Gross payment status: 0%

Example

A registered subcontractor invoices £5,000 gross, with £1,000 in materials. Taxable amount = £5,000 - £1,000 = £4,000. CIS deduction = £4,000 x 20% = £800. Net payment received = £5,000 - £800 = £4,200.

Reference

HMRC Construction Industry Scheme (CIS) — gov.uk/what-is-the-construction-industry-scheme

Frequently Asked Questions

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Last updated: February 2026

All calculations are estimates. Verify with your supplier.