Bookkeeping for CIS subcontractors
Contractors take CIS tax off the labour on your invoices, usually 20%, and pay it to HMRC in your name. We keep your books and record every deduction through the year, so you know what has been taken off and what you can claim back.
Where does the CIS deduction go?
The contractor does not keep it. They pay it to HMRC in your name, towards the tax bill you have not worked out yet. You may be owed some of it back, because the deduction is a flat rate taken before your business costs are counted.
The rate taken off depends on your standing with HMRC, not on anything the contractor chooses.
| Rate | When it applies |
|---|---|
| 0% | You have gross payment status, which you apply to HMRC for and have to keep meeting its tests for |
| 20% | You are registered with HMRC for CIS and the contractor has verified you (checked your details with HMRC) |
| 30% | You are not registered, or you have not been verified |
The deduction should only come off the labour. Materials you paid for, plant hire and fuel used for the work are taken out of the figure before the rate is applied. Check an invoice with our free CIS calculator, or, pricing a job, work out what to invoice to be paid a set amount.
How do you get CIS deductions back?
It depends on whether you work as a limited company or as a sole trader.
Limited company: through your payroll
Your company claims the deductions back through its PAYE scheme (its payroll), month by month, on an Employer Payment Summary. Anything left over at the end of the tax year can be repaid, but only once all your PAYE, CIS and Corporation Tax returns are filed, so if your payroll is behind, the money is held up too. How our payroll service works
Sole trader: through your Self Assessment
Your deductions are taken off the tax and National Insurance worked out on your Self Assessment return, and anything you have overpaid comes back to you. We keep your records and deduction figures up to date all year. You, or whoever does your tax, send the return itself. Where the CIS goes on your tax return
Once your income from self-employment and property goes over a set amount, Making Tax Digital for Income Tax also means a summary to HMRC every three months. We send those for you once you have approved them.
What we do for subcontractors
We keep your records right all year, so the amount you claim back is worked out from proper records. Nobody can honestly promise you a bigger refund, so we do not.
- We record every deduction from the contractor’s monthly statements
- We check the split between labour and materials on each invoice, because the deduction is worked out on the labour
- We chase any missing payment and deduction statements (the monthly statement showing what you were paid and what was taken off) while the contractor still remembers the job
- We keep your books up to date all year, so nothing has to be pieced together from a bag of receipts
- We record your business costs as you pay them, with the receipt kept against each one, so none is missed when your tax is worked out
- You record your journeys between sites on a mileage app on your phone, and we keep the log with your books. Those miles are an expense you can claim, and the only one with no receipt to find later. Mileage rates and which journeys count
If you have a year of deductions and are not sure the total is right, we can start from there.
Get in touchIf you also pay subcontractors yourself, you are a contractor as well, and you have monthly CIS returns to send. Those are the part with the deadlines and the penalties. How we help contractors
Common questions about CIS for subcontractors
Why has 30 percent come off instead of 20?
Because you are not registered with HMRC for CIS, or the contractor has not verified you (checked your details with HMRC). Once you are registered and verified, the rate drops to 20 percent. Sort it out as soon as you notice, because the extra is not refunded early. It stays with HMRC until your tax for the year is worked out.
Is the CIS deduction extra tax?
No. It is an advance payment towards the tax and National Insurance you would owe anyway, paid to HMRC in your name before your tax bill is worked out. That is why you may be owed some of it back.
Should CIS come off my materials?
No. The deduction only comes off the labour. Materials you paid for, plant hire and fuel used for the work are taken out of the figure before the rate is applied. If that split is wrong, too much is taken off, so check each invoice.
What is a payment and deduction statement, and do I need it?
It is a statement the contractor must give you within 14 days of the end of each tax month, showing what they paid you and what they took off. It is your proof of the deductions. Keep every one, because piecing a year of them together from your bank statements in January turns the figure into a guess.
How do I get the money back?
It depends on your business type. A limited company claims it back through its own PAYE scheme (its payroll), and HMRC will only repay once all its PAYE, CIS and Corporation Tax returns are filed. A sole trader's deductions are taken off their Self Assessment tax bill instead.
Can I stop having deductions taken at all?
Only if you have gross payment status. You apply to HMRC for it, and you have to keep passing its tests on your business, your turnover and whether your tax is up to date (the compliance test). The contractor cannot give it to you. Until then, the rate is set by what verification shows. Since 6 April 2026, HMRC can also take it away straight away where a business knew or should have known it was in a chain connected with fraud.
How much does bookkeeping cost for a CIS subcontractor?
It is priced on your turnover, and there is no extra charge for the CIS taken off your invoices. That charge is only for contractors who pay subcontractors. You can see your exact monthly price on our pricing page in about a minute, with no email needed.
Do I need an accountant as a CIS subcontractor?
Not for your bookkeeping. We keep your records and your deduction figures right all year. As a sole trader, you or whoever does your tax sends the Self Assessment return. A limited company's year end accounts go to its accountant, and up to date books make that job quicker.
Primary sources and further reading
If HMRC and this page ever disagree, HMRC is right. Tell us and we will fix it.
- What you must do as a Construction Industry Scheme (CIS) subcontractorGOV.UK (opens in a new tab)
- Construction Industry Scheme: a guide for contractors and subcontractors (CIS340)HMRC (opens in a new tab)
- Claim a refund of Construction Industry Scheme deductions if you're a limited company or an agentHMRC (opens in a new tab)
Keep your CIS deductions in order all year
The deductions come off either way. Records kept as you go mean every deduction is counted. Tell us about your year so far when you join the waitlist and we will tell you where you stand. Join the waitlist for 2027.