How do CIS deductions work for subcontractors?
Under the Construction Industry Scheme, a contractor deducts 20% from a registered subcontractor's payments and passes it to HMRC, or 30% if you are not registered. These deductions count as advance payments towards your tax and National Insurance bill. You claim them back through your Self Assessment return.
Figures checked against gov.uk on . General information, not tax advice.
At a glance
- Registered subcontractor
- 20% deducted
- Not registered
- 30% deducted
- No deductions
- Apply for gross payment status
Claiming the money back
At the end of the tax year, gov.uk says to submit your Self Assessment return as usual, reporting your total pay before deductions as income and the total deductions your contractors took as CIS deductions. HMRC works out your tax and subtracts the deductions. If you still owe tax, you pay it by 31 January after the tax year ends; if you are due a refund, HMRC pays it back.
Stopping mid-year and gross payment
If you stop trading, you can claim back deductions already taken that tax year using form CIS40 (sole traders) or CIS41 (partners). If you do not want deductions taken in advance, gov.uk says you can apply for gross payment status.
Keep the payment and deduction statements your contractors give you, because they are the evidence for the figures you enter.