What are the UK CIS deduction rates?

Three rates apply: 20% for subcontractors who are CIS-registered and verified, 30% for unregistered or unverified subcontractors, and 0% for those who hold Gross Payment Status (GPS). The contractor verifies the subcontractor with HMRC before the first payment, and the system returns which rate to apply.

What payments are excluded from the deduction?

CIS deductions apply only to the labour portion of a payment. Materials, plant hire, fuel for plant, equipment hire, VAT and any other reasonable costs separately invoiced by the subcontractor are excluded. The contractor reduces the gross invoice by these excluded costs before applying the 20% / 30% rate to the remaining labour figure.

How do subcontractors reclaim CIS deductions?

Unincorporated subcontractors (sole traders, partnerships) reclaim deductions via Self Assessment - the CIS shown on payment statements offsets against the Income Tax + NI bill on the year's self-employed profits. Incorporated subcontractors offset deductions against their PAYE / Corporation Tax bill via the EPS monthly. CIS overpayments above tax due are refunded after year-end submission.

How do I get Gross Payment Status?

A subcontractor can apply for Gross Payment Status if (a) their business is run through a bank account, (b) they have a turnover above the relevant threshold (£30,000 sole trader, £30,000 per partner for partnerships, £100,000 net for limited companies), and (c) they have a clean compliance record with HMRC. GPS removes the CIS deduction entirely - the subcontractor receives 100% of invoiced amounts and accounts for their own tax annually.

Does CIS apply to all construction work?

CIS covers most construction-related activity: building, demolition, alteration, repair, painting and decorating, installation of heating/lighting/sanitation, site preparation. Exceptions include professional services (architecture, surveying, scaffolding hire without labour, manufacturing materials away from site), and one-off work outside the construction-only-business definition. Detailed scope guidance is in HMRC's CIS340 manual.

When did CIS rates last change?

The current 20% / 30% / 0% structure has been in place since the 2007 reform of the original CIS. Rates have been stable since - no change in 2026/27. The main recent operational change was the April 2021 introduction of the VAT reverse charge for construction services, which affects the VAT mechanics of CIS-able invoices but not the CIS deduction itself.

CIS Deduction on a £1,000 Invoice (2026/27)

A £1,000 UK construction-industry subbie invoice attracts different CIS deductions depending on the subcontractor's verification status. Figures below assume 20% of the invoice is materials (excluded from CIS) and the remaining £800 is labour - the deduction base. Adjust on the main CIS calculator for your actual materials split.

Registered (20%)

£840

CIS deducted: £160

Unregistered (30%)

£760

CIS deducted: £240

Gross Payment Status (0%)

£1,000

CIS deducted: £0 - subbie accounts for own tax

No materials (pure-labour) version

If the £1,000 invoice is entirely labour (no materials, no plant, no excluded costs), the deduction applies to the whole figure:

Registered (20%): CIS deducted £200, net paid £800.
Unregistered (30%): CIS deducted £300, net paid £700.
Gross Payment Status: CIS deducted £0, full £1,000 paid.

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Frequently asked questions

What are the UK CIS deduction rates?: Three rates apply: 20% for subcontractors who are CIS-registered and verified, 30% for unregistered or unverified subcontractors, and 0% for those who hold Gross Payment Status (GPS). The contractor verifies the subcontractor with HMRC before the first payment, and the system returns which rate to apply.
What payments are excluded from the deduction?: CIS deductions apply only to the labour portion of a payment. Materials, plant hire, fuel for plant, equipment hire, VAT and any other reasonable costs separately invoiced by the subcontractor are excluded. The contractor reduces the gross invoice by these excluded costs before applying the 20% / 30% rate to the remaining labour figure.
How do subcontractors reclaim CIS deductions?: Unincorporated subcontractors (sole traders, partnerships) reclaim deductions via Self Assessment - the CIS shown on payment statements offsets against the Income Tax + NI bill on the year's self-employed profits. Incorporated subcontractors offset deductions against their PAYE / Corporation Tax bill via the EPS monthly. CIS overpayments above tax due are refunded after year-end submission.
How do I get Gross Payment Status?: A subcontractor can apply for Gross Payment Status if (a) their business is run through a bank account, (b) they have a turnover above the relevant threshold (£30,000 sole trader, £30,000 per partner for partnerships, £100,000 net for limited companies), and (c) they have a clean compliance record with HMRC. GPS removes the CIS deduction entirely - the subcontractor receives 100% of invoiced amounts and accounts for their own tax annually.
Does CIS apply to all construction work?: CIS covers most construction-related activity: building, demolition, alteration, repair, painting and decorating, installation of heating/lighting/sanitation, site preparation. Exceptions include professional services (architecture, surveying, scaffolding hire without labour, manufacturing materials away from site), and one-off work outside the construction-only-business definition. Detailed scope guidance is in HMRC's CIS340 manual.
When did CIS rates last change?: The current 20% / 30% / 0% structure has been in place since the 2007 reform of the original CIS. Rates have been stable since - no change in 2026/27. The main recent operational change was the April 2021 introduction of the VAT reverse charge for construction services, which affects the VAT mechanics of CIS-able invoices but not the CIS deduction itself.