EaseMyTax

Construction Industry Scheme

Paid under CIS? Report the gross, claim the deductions, and get the refund

Under the Construction Industry Scheme the contractor takes tax off before paying you: 20% if you are registered, 30% if you are not. That is not your final tax, it is a payment towards it. On your tax return you report the gross amount you were paid as self-employment turnover, claim your costs, and enter the deductions as tax already paid. Because the deductions ignore your Personal Allowance and expenses, most subcontractors have paid too much and get a refund.

How it works

1. Register as a subcontractor

Register for Self Assessment as self-employed, then register for CIS online with your UTR and National Insurance number. Registered subcontractors are deducted at 20%; unregistered at 30%. Registration is free and takes a few minutes.

2. The contractor verifies you and deducts

Before the first payment the contractor checks you with HMRC and is told which rate to use. The deduction is taken from the labour part of the invoice only, not from materials you supplied, and not from VAT.

3. Payment and deduction statements

Within 14 days of the end of each tax month (the 5th) the contractor must give you a statement showing the gross payment, the cost of materials, and the deduction. These are your proof. Keep every one; HMRC checks your claim against what contractors reported.

4. Turnover is the gross amount

On the self-employment pages your turnover is what you were paid before the deduction, including materials. Never the net amount that reached your bank: doing that understates income and loses the deductions.

5. Deductions are tax already paid

Box 38 of the short self-employment pages (81 on the full pages) takes the total of the deductions on your statements. It comes straight off your bill, the same as PAYE tax on a payslip. It also counts towards the 80% test, so payments on account are rarely needed.

6. Gross payment status

With turnover of at least £30,000 a year (labour only) and a clean tax record, you can apply to be paid gross with no deductions at all. You then pay everything through the return. HMRC reviews it every year.

What the Construction Industry Scheme is (GOV.UK)Register for CIS as a subcontractor (GOV.UK)What you must do as a CIS subcontractor (GOV.UK)Pay tax and claim back CIS deductions (GOV.UK)Gross payment status (GOV.UK)

Work out your year

Add up the gross payments, materials and deductions from your statements, put in your other costs, and we show the tax and Class 4 really due, the deductions as credit, and the refund or balance. A PAYE job in the same year can go in too.

Your figures

Before deductions, including materials, excluding VAT. Add up the gross amounts on your statements.

£

The materials part of your invoices, on which no deduction should have been taken.

£

Tools, protective clothing, travel between sites, phone, insurance, accountancy.

£

The deduction line on every payment and deduction statement, added up.

£
Are you registered for CIS?

Registered subcontractors are deducted at 20%; unregistered at 30%.

From your P60. Leave empty if none.

£

Also from the P60.

£
Enter the gross payments and deductions from your statements to see the tax really due and your refund.

The self-employment pages for a subcontractor, screen by screen

The same pages every sole trader fills in, with the CIS deductions box, as a list or as they look online.

Done online

The self-employment pages for a CIS subcontractor

A subcontractor fills in the same self-employment pages as any sole trader, with one extra box: the CIS deductions the contractors took. Turnover is the gross amount paid, before those deductions and including materials.

Enter your figures above and the boxes fill in.

Every box can be typed into, here or on the redrawn screens, and what you type stays in the box while you read the rest.

Show the pages as
Screen 1 of 5

Your business

The first self-employment screen. A subcontractor is a sole trader like any other; nothing here says CIS.

  • Section

    Business name

    Your own name is fine if you have no trading name.

    From your records
  • Section

    Description of business

    A few words: bricklayer, electrician, groundworker. The word subcontractor is not needed.

    From your records
  • Section

    Were you self-employed?

    Yes, on page 1 of Tailor your return, with the number of businesses (usually 1). The self-employment pages then appear.

    Put X
Screen 2 of 5

Business income

The gross amount contractors paid you, before the deductions and including any materials they paid you for.

  • Section

    Your turnover

    Box 9. Every gross payment from contractors in the year, before CIS deductions, including materials, excluding VAT. Add up the gross amounts on your payment and deduction statements.

    From your records
    £
Screen 3 of 5

Allowable expenses

Materials you bought, and everything else the work cost you. With turnover under the short-form limit you can enter one total.

  • Section

    Cost of goods bought for resale or goods used

    Box 11 (or box 17 on the full pages). Materials you bought for jobs. If you enter one total of expenses in box 20 instead, include them there.

    From your records
    £
  • Section

    Total allowable expenses

    Box 20. Tools, protective clothing, travel between sites, phone, insurance, accountancy. Keep receipts for six years.

    From your records
    £
  • Section

    Net profit

    Box 21. Turnover less expenses. The online return works it out.

    From your records
    £
Screen 4 of 5

Tax taken off

The box that makes the difference. The 20% the contractors deducted is tax you have already paid, and it comes straight off your bill.

  • Section

    Total CIS deductions taken from your payments by contractors

    Box 38 (box 81 on the full pages). The deductions on every statement added together: the 20% the contractors took. This is tax already paid and comes straight off your bill. Enter exactly what the statements show.

    From your records
    £
  • Section

    Other tax taken off trading income

    Box 39. Almost always empty for a subcontractor; only for tax deducted under some other scheme.

    From your records
    £
  • Section

    You have a payment and deduction statement for every payment

    Contractors must give you one within 14 days of the end of each tax month. Chase any that are missing before you file; HMRC checks your claim against what contractors reported.

    Put X
Screen 5 of 5

National Insurance

Class 4 is worked out from your profit automatically. Class 2 is treated as paid if your profit is £7,105 or more.

  • Section

    Class 2 and Class 4 National Insurance

    Nothing to enter: both are worked out from your profit. If profit is under £7,105, tick the box to pay Class 2 voluntarily so the year counts towards your State Pension.

    Put X

What happens after you submit

HMRC matches the deductions you claim against what contractors reported on their monthly CIS returns. A mismatch delays the refund, so enter exactly what the statements show. Refunds usually arrive in the bank within a few weeks of filing; file early in the year if you are owed money.

Pay tax and claim back CIS deductions (GOV.UK)

On the tax return, step by step

  1. 1

    Register for Self Assessment by 5 October after your first year, if you have not already, and keep your UTR: you need it to register for CIS.

  2. 2

    On page 1 of Tailor your return answer Yes to self-employment. On the self-employment pages enter the gross payments as turnover (box 9), your costs (box 20, with materials in box 11 if you itemise), and the deductions in box 38.

  3. 3

    Class 4 National Insurance is worked out from your profit at £12,570 and above; Class 2 is treated as paid if profit is £7,105 or more, and can be paid voluntarily (£3.65 a week) below that.

  4. 4

    View your calculation: the deductions appear as tax already paid, under the total due. A negative balance is your refund. Give bank details on the return so it is paid straight in, usually within a few weeks.

  5. 5

    File early in the year if you are owed money. HMRC can only repay once your return is in, and it checks the deductions against contractors' monthly returns, so keep the statements to hand in case a figure is queried.

Watch out for

Materials

Contractors should not deduct on materials you paid for. If a statement shows the deduction taken on the whole invoice, ask the contractor to correct it; you still claim your actual material costs as an expense.

Deductions at 30%

If you were not registered, or the contractor could not verify you, 30% was taken. It is still your money: enter the actual deductions and the refund is larger. Then register so it does not happen again.

VAT reverse charge

If you are VAT registered, most CIS work is under the domestic reverse charge: you do not charge VAT to a VAT-registered contractor. It does not change the Income Tax picture but it changes your invoices.

The return walkthroughYour self-employment pages, with the CIS box, alongside everything else on the return.Open the walkthroughDo I need to file?A subcontractor always does, and the check now takes the CIS deductions into account in the tax estimate.Start the checkPayments on accountWhy CIS deductions usually mean none are due, and how to reduce them if they were set.Read about payments on account