CIS Deduction Calculator

The Construction Industry Scheme (CIS) is HMRC's way of collecting tax from subcontractors in the construction sector. As a contractor, you deduct money from a subcontractor's payment and pass it to HMRC as an advance toward their tax and National Insurance.

CIS applies to most construction work in the UK — site preparation, alterations, demolition, repairs, decorating, and the like. It applies whether you're a limited company, sole trader, or partnership, and whether the subcontractor is based in the UK or overseas.

There are three deduction rates. Subcontractors registered under CIS have 20%deducted from their labour. Subcontractors who haven't registered (or whose UTR HMRC can't verify) have 30% deducted — the higher rate is HMRC's way of nudging people into the scheme. Subcontractors with gross payment statushave nothing deducted and settle their tax through their own return.

Materials supplied by the subcontractor are deducted from the gross before CIS is applied. So if you're paying £1,000 with £200 of materials, the deduction is calculated on the £800 of labour. You then pay HMRC by the 22nd of the following month (or the 19th if paying by post), and file a CIS300 monthly return for every month you have subcontractor activity — even if you have nothing to report.