Guides · Updated 15 October 2026

CIS deductions explained

The contractor takes 20% of your labour if you are registered for CIS, 30% if not, and nothing with gross payment status. They pay it to HMRC for you, and you get it back through your tax return. Here is how it works.

A black calculator beside a printed payment statement on a wooden desk
Check the deduction against the labour amount.

The three rates

Your statusTaken from labour
Registered with CIS20%
Not registered30%
Gross payment status0% - paid in full

A worked example

  • Labour £1,000 and materials £400, invoice total £1,400 (before VAT)
  • Deduction at 20%: £200, taken from the £1,000 labour only
  • You are paid £1,200; the £200 goes to HMRC as tax paid on your behalf

Try your own figures in the CIS calculator, then put them on a CIS invoice template.

JobGuard keeps labour, materials and payments of each job together, so the invoice is ready the day you finish.

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Getting the money back

The deductions are set against your income tax and National Insurance when you file your self assessment. If you have paid more than you owe, HMRC repays the difference. Keep the monthly statement from every contractor to check the totals.

Gross payment status

Gross payment status means you are paid with no deduction. You have to apply to HMRC and meet its tests on turnover, compliance and having a business bank account, so check the current conditions on gov.uk. Lose it and deductions start again.

More on the invoice itself: how to invoice under CIS.

General information for England and Wales, not legal or tax advice. For your own situation, speak to a solicitor, accountant or Citizens Advice.

JobGuard keeps labour, materials and payments of each job together, so the invoice is ready the day you finish.

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Questions

Why is my CIS deduction 30%?

Usually because you are not registered with CIS, or the contractor could not verify you with HMRC. Register as a subcontractor and the rate drops to 20%.

Are materials deducted?

No. Only the labour part is deducted, which is why labour and materials should be separate on the invoice.

Is CIS tax on top of my tax bill?

No. It counts as tax you have already paid and is credited on your self assessment.

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