CIS Status Check — Which Deduction Rate Applies to You?
If you work in the UK construction industry, the Construction Industry Scheme (CIS) determines how much tax is deducted from your payments before you receive them. The rate can be 0%, 20%, or 30% depending on your registration status. This quick check tells you which rate applies to you and what you can do about it.
How to use
Answer 3 to 5 questions about your work, registration status, and whether you have Gross Payment Status. The tool follows the CIS rules and tells you your deduction rate, what it means for your cash flow, and what steps you can take to improve your position.
Understanding Your CIS Deduction Rate
CIS deductions are not extra tax. They are advance payments towards your annual tax bill that your contractor makes to HMRC on your behalf. When you file your Self Assessment or Corporation Tax return, CIS deductions are offset against what you owe. If your deductions exceed your tax liability, you can claim a refund. The key issue is cash flow: higher deduction rates mean less money in your pocket each month.
Frequently Asked Questions
What is the Construction Industry Scheme?
CIS is a tax scheme that requires contractors in the construction industry to deduct money from payments to subcontractors and pass it to HMRC. The deduction counts as an advance payment of the subcontractor's tax. The rate depends on whether the subcontractor is registered (20%), unregistered (30%), or has Gross Payment Status (0%).
What work is covered by CIS?
CIS covers most physical construction work: building, repairs, decorating, demolition, civil engineering, and installing systems like heating, lighting, plumbing, and ventilation. It also covers site preparation and cleaning after construction. It does not cover architecture, surveying, or hire of scaffolding or plant without labour.
How do I apply for Gross Payment Status?
Apply to HMRC by phone (0300 200 3210) or online. You need: a clean tax compliance record (all returns filed on time, all tax paid on time), annual turnover above 30,000 pounds (sole trader), 30,000 per partner (partnership), or 30,000 per director (company). HMRC reviews GPS annually and can withdraw it for compliance failures.
What happens if my contractor deducts at the wrong rate?
If your contractor deducts too much (for example, 30% when you are registered for 20%), the excess is not lost. It is credited against your tax return. However, it does affect your cash flow in the meantime. Contact your contractor and ask them to verify your status with HMRC to correct the rate for future payments.
Do CIS deductions apply to materials?
No. CIS deductions only apply to the labour element of your invoice. Materials costs are paid in full without deduction. This is why it is important to clearly separate labour and materials on your invoices. If you do not split them, the contractor must apply the deduction to the entire payment.
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Book a Free Discovery Call© Imperial Consulting Limited, trading as Grosvenor.Solutions. Registered in England. This tool is for educational and illustrative purposes only. It does not constitute financial, tax, or legal advice. Consult a qualified professional for decisions affecting your business.