How does CIS work for subcontractors? It’s the question I hear more than almost any other, and honestly it makes complete sense that it’s confusing because the scheme was never designed with plain English in mind.

What CIS actually is, in plain English

CIS stands for the Construction Industry Scheme. It’s a set of HMRC rules that govern how tax is handled when a contractor pays a subcontractor for construction work. Instead of you sorting your own tax entirely at the end of the year, your contractor deducts a chunk upfront and sends it to HMRC on your behalf.

The scheme covers a wide range of work, including building, demolition, installation, repairs, decorating and civil engineering. HMRC estimates CIS protects approximately £8.6 billion in tax annually, which tells you how seriously they take it. If you’re working as a subcontractor in the trades, the chances are CIS applies to you.

How CIS deductions actually work on your payments

When your contractor pays you, they’re required to deduct either 20% or 30% from your labour element before the money hits your account. The rate depends on your registration status. Failing to register for CIS means you face the higher 30% deduction rate, which is a significant hit to your weekly or monthly cash flow.

Here’s the part people often miss. Those deductions aren’t gone forever. They’re paid to HMRC on your behalf, and they count directly against your tax bill when you file your Self Assessment return. If more has been deducted than you actually owe in tax, you get the difference back as a refund. Getting that right means keeping clear records of every CIS statement your contractor gives you, which is exactly where things tend to go wrong.

The mistakes that cost subcontractors money

The most common one is simply not registering, which means accepting 30% deductions when 20% is all you’d pay if you’d taken five minutes to sort it. The second is not keeping hold of your CIS deduction statements from your contractors. Without those, I can’t claim back what you’ve overpaid, and you’ll end up leaving real money with HMRC that should be in your pocket.

There’s also a subtler issue around materials. CIS deductions only apply to labour, not to the cost of materials, but only where the subcontractor directly incurred that cost. If you’re providing materials and your contractor is deducting CIS on the full invoice, that’s worth checking. It can add up over a year without anyone noticing.

What sorted CIS accounting actually looks like in practice

Good CIS accounting means you’re registered, your deductions are tracked against your tax liability, your Self Assessment return is filed accurately and on time, and any overpaid tax comes back to you promptly. It also means someone is keeping an eye on things across the tax year, not just scrambling at the deadline in January.

I work with subcontractors across the UK, handling this personally from start to finish. No junior staff, no handoffs. You ring me, you speak to me. I know what questions to ask, what records to pull together and what HMRC will expect, so you don’t have to figure it out yourself. If you’ve been putting this off because it feels like a mess, that’s fine. Most people come to me in exactly that state and it’s always more fixable than they think.