Do I have to register for CIS?

You are not legally required to register, but if you don't, contractors must deduct 30% instead of 20% from your payments. Registration is free and straightforward through HMRC.

Does CIS apply to materials?

No. CIS deductions only apply to the labour element of your payment. Materials you supply should be invoiced separately and are not subject to CIS deduction.

How do I get gross payment status?

You need to apply to HMRC and meet three tests: a turnover test (typically £30,000+), a compliance test (tax returns and payments up to date), and a business test (you operate through a UK bank account). Most new subcontractors start at 20% and work towards gross payment status.

CISconstructionsubcontractorHMRCtax

CIS Explained: What Every UK Subcontractor Needs to Know

19 February 20262 min read

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) is an HMRC scheme that requires main contractors to deduct tax at source from payments made to subcontractors. The deducted amount is then paid to HMRC on the subcontractor's behalf.

If you work as a subcontractor in the construction industry, CIS affects how you are paid and how you invoice.

CIS deduction rates

20% — for subcontractors registered with HMRC under CIS
30% — for subcontractors not registered with HMRC
0% (gross payment status) — for subcontractors who meet HMRC criteria for gross payment

Use our CIS deduction calculator to quickly work out your deduction and net payment.

How to register for CIS

You register as a subcontractor through HMRC. You will need your Unique Taxpayer Reference (UTR) and National Insurance number. Registration brings your deduction rate down from 30% to 20%.

To apply for gross payment status (0% deduction), you need to meet turnover and compliance tests — most sole trader subcontractors won't qualify initially, but it's worth checking if your turnover exceeds £30,000.

CIS invoicing

Your invoices to contractors must clearly show:

Gross amount (labour only — materials are not subject to CIS)
CIS deduction amount and rate
Net payment due
Materials cost (shown separately, not subject to CIS)

InvoiceAdept handles CIS calculations automatically — see our CIS invoicing feature.

Materials are not subject to CIS

An important point many subcontractors miss: CIS deductions only apply to the labour element of your invoice. Materials you supply should be listed separately and are not subject to deduction.

Make sure your invoices clearly separate labour and materials to avoid overpaying CIS.

Claiming back CIS deductions

CIS deductions are not a tax — they are advance payments of your income tax. When you file your self-assessment tax return, the total CIS deducted during the year is offset against your tax bill. If more CIS has been deducted than you owe in tax, you will receive a refund from HMRC.

This is why keeping accurate records of all CIS deductions is essential. Use our self-assessment calculator to estimate your tax position.

Get CIS right on every invoice

Try InvoiceAdept free — automatic CIS calculations, clear deduction breakdowns, and records your accountant will love. Browse builders and other trades in our UK directory.