The Construction Industry Scheme, made simple.
CIS is how HMRC collects tax on payments to subcontractors in construction. We take care of the returns, the records and the refunds, so you can stay on site.
What is CIS?
When a contractor pays a subcontractor for construction work, the contractor deducts tax from the payment and passes it to HMRC. That deduction counts towards the subcontractor's own tax bill.
Contractor
Pays the subcontractor for labour, less the CIS deduction. Materials are not deducted from.
HMRC
Receives the deductions each month, reported on the contractor's CIS return.
Subcontractor
Receives a statement of what was deducted and counts it against their tax bill.
Most on-site construction work is covered, including building, alterations, repairs, decorating and installing systems like heating and lighting. Some jobs sit outside the scheme, so ask us if you are unsure.
The three deduction rates
The rate depends on how the subcontractor is registered with HMRC. Rates are unchanged by the 2026 reforms.
Registered subcontractor
The standard rate for subcontractors who are registered with CIS.
Not registered
Applies if a subcontractor has not registered. It is a good reason to register early.
Gross payment status
Paid in full with no deductions, if you pass HMRC's tests. You then pay tax through your own return.
How contractors submit CIS returns
Contractors report what they have paid every month. Here is the process, from start to finish.
Register as a contractor
Register with HMRC before you take on your first subcontractor.
Verify each subcontractor
Check them with HMRC before the first payment. HMRC tells you which rate to use.
Pay and deduct
Deduct the right percentage from the labour part of each payment and keep records.
File the monthly return
Send your CIS return online by the 19th, covering the tax month from the 6th to the 5th.
Pay HMRC
Pay the deductions over by the 22nd if you pay electronically.
Give statements
Send each subcontractor a payment and deduction statement within 14 days of the tax month end.
Changed from 6 April 2026: contractors must now file a return every month, even a nil return where no subcontractors were paid, unless HMRC has been told in advance. Late returns can bring penalties from £100, rising the longer they are overdue.
An example month
Payments made to subcontractors between 6 September and 5 October 2026.
- 6 SeptemberThe tax month begins
- 5 OctoberThe tax month ends
- 19 OctoberCIS return due with HMRC
- 22 OctoberDeductions due to HMRC if paying electronically
If you are the subcontractor
Tax has already been taken from your payments, but it is not the end of the story. This is where many subcontractors overpay.
- Register for CIS so you are charged 20%, not 30%.
- Keep every statement. Your contractor should send one each month showing what was deducted.
- Claim it back on your tax return. Deductions are counted against your tax and National Insurance. If you have paid too much, HMRC refunds the difference.
- Consider gross payment status. It means no deductions and better cash flow, but you must pass HMRC's tests and keep your tax affairs up to date.
We can handle CIS for you
Whether you pay subcontractors or are one, we deal with the paperwork and the deadlines. Fixed monthly fee, agreed upfront.
For contractors
- Contractor registration with HMRC
- Verifying your subcontractors
- Monthly CIS returns, including nil returns, filed on time
- Deduction statements for each subcontractor
- Reminders so payments reach HMRC by the 22nd
For subcontractors
- CIS registration
- Bookkeeping that tracks your income and deductions
- Checking your statements add up
- Self assessment return, claiming back what you are owed
- Gross payment status applications
CIS questions
Do I still file if I paid no subcontractors this month?
Yes. Since 6 April 2026, contractors must submit a nil return for any month with no payments, unless they have told HMRC in advance that they will not be paying subcontractors.
Is the deduction taken from materials too?
No. The deduction applies to the labour element only. Materials, plant hire and VAT are left out.
I am a subcontractor. Will I get money back?
Possibly. Deductions are treated as payments towards your tax. When you file your return, if more has been taken than you owe, HMRC refunds the difference.
Does CIS apply to every trade?
It applies to most construction work on site. Some work, such as architecture, surveying or some supply-only jobs, is outside the scheme. Ask us and we will confirm.
What if I have missed CIS returns?
Get in touch straight away. We can file what is outstanding and talk to HMRC about penalties.
Want an estimate? Try our CIS refund calculator. This page is general information, not personal tax advice. It reflects the position at October 2026.