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?

Contractors do not take CIS deductions from amounts on the invoice for VAT, materials the subcontractor paid for directly, equipment that is now unusable (consumable stores), plant hired for the job, and manufacturing or prefabricating materials (gov.uk). The 20% or 30% rate applies to the rest. The contractor may ask for evidence of materials costs and estimate them if there is none.

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. A limited company subcontractor enters its CIS deductions on the Employer Payment Summary (EPS) and HMRC sets them against the company's PAYE bill; they must not be used against Corporation Tax. Deductions left over at the end of the tax year can be claimed back as a refund.

How do I get Gross Payment Status?

You must show HMRC that you have paid tax and National Insurance on time in the past, that the business does construction work (or provides labour for it) in the UK, and that it is run through a bank account. Turnover over the last 12 months, ignoring VAT and materials, must be at least £30,000 for a sole trader; £30,000 for each partner or £100,000 for the whole partnership; or £30,000 for each director or £100,000 for the whole company (£30,000 for each of them if 5 or fewer people control the company). Contractors then pay in full and you pay your tax at the end of the year (gov.uk).

Does CIS apply to all construction work?

CIS covers most construction work on permanent or temporary buildings and structures and civil engineering: site preparation, demolition and dismantling, building work, alterations, repairs and decorating, installing heating, lighting, power, water and ventilation systems, and cleaning inside buildings after construction work. Exceptions include architecture and surveying, scaffolding hire with no labour, carpet fitting, making materials used in construction, delivering materials, and work on site that is clearly not construction, such as running a canteen (gov.uk). Detailed scope guidance is in HMRC's CIS 340 guide.

When did CIS rates last change?

The 20% (registered and verified), 30% (unregistered or unverified) and 0% (gross payment status) rates are unchanged for 2026/27. The main recent operational change was the VAT domestic reverse charge for construction services from 1 March 2021, which changes how VAT is accounted for on CIS invoices but not the CIS deduction itself.

CIS Deduction on a £500 Invoice (2026/27)

A £500 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 £400 is labour - the deduction base. Adjust on the main CIS calculator for your actual materials split.

Registered (20%)

£420

CIS deducted: £80

Unregistered (30%)

£380

CIS deducted: £120

Gross Payment Status (0%)

£500

CIS deducted: £0 - subbie accounts for own tax

No materials (pure-labour) version

If the £500 invoice is entirely labour (no materials, no plant, no excluded costs), the deduction applies to the whole figure:

Registered (20%): CIS deducted £100, net paid £400.
Unregistered (30%): CIS deducted £150, net paid £350.
Gross Payment Status: CIS deducted £0, full £500 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?: Contractors do not take CIS deductions from amounts on the invoice for VAT, materials the subcontractor paid for directly, equipment that is now unusable (consumable stores), plant hired for the job, and manufacturing or prefabricating materials (gov.uk). The 20% or 30% rate applies to the rest. The contractor may ask for evidence of materials costs and estimate them if there is none.
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. A limited company subcontractor enters its CIS deductions on the Employer Payment Summary (EPS) and HMRC sets them against the company's PAYE bill; they must not be used against Corporation Tax. Deductions left over at the end of the tax year can be claimed back as a refund.
How do I get Gross Payment Status?: You must show HMRC that you have paid tax and National Insurance on time in the past, that the business does construction work (or provides labour for it) in the UK, and that it is run through a bank account. Turnover over the last 12 months, ignoring VAT and materials, must be at least £30,000 for a sole trader; £30,000 for each partner or £100,000 for the whole partnership; or £30,000 for each director or £100,000 for the whole company (£30,000 for each of them if 5 or fewer people control the company). Contractors then pay in full and you pay your tax at the end of the year (gov.uk).
Does CIS apply to all construction work?: CIS covers most construction work on permanent or temporary buildings and structures and civil engineering: site preparation, demolition and dismantling, building work, alterations, repairs and decorating, installing heating, lighting, power, water and ventilation systems, and cleaning inside buildings after construction work. Exceptions include architecture and surveying, scaffolding hire with no labour, carpet fitting, making materials used in construction, delivering materials, and work on site that is clearly not construction, such as running a canteen (gov.uk). Detailed scope guidance is in HMRC's CIS 340 guide.
When did CIS rates last change?: The 20% (registered and verified), 30% (unregistered or unverified) and 0% (gross payment status) rates are unchanged for 2026/27. The main recent operational change was the VAT domestic reverse charge for construction services from 1 March 2021, which changes how VAT is accounted for on CIS invoices but not the CIS deduction itself.