# CIS tax in construction: deductions and how to reclaim

> Work & self-employment · Last updated 23 June 2026

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## Quick answer

The Construction Industry Scheme (CIS) requires contractors to deduct 20% or 30% from subcontractor payments and pass it to HMRC. Subcontractors register for gross payment status to avoid deductions, or reclaim overpaid tax through Self Assessment.

If you work in construction as a subcontractor — plastering, plumbing, electrical, roofing, and many other trades — CIS affects how you are paid. Contractors deduct tax at source before paying you. Understanding CIS helps you minimise deductions and reclaim overpaid tax at the end of the tax year.

## Key facts

- Contractors deduct 20% from registered subcontractors or 30% from unregistered ones
- Gross payment status lets you receive full payment with no deduction — requires HMRC approval
- CIS deductions count as advance tax payments — reclaim overpayments via Self Assessment
- CIS covers most construction work but excludes certain activities like architecture and surveying

## How CIS deductions work

When a contractor pays you, they deduct CIS tax from the labour element of your invoice (not materials). Registered subcontractors lose 20%; unregistered ones lose 30%.

The contractor sends the deducted tax to HMRC and gives you a payment statement showing the gross amount, deduction, and net payment.

## Registering and gross payment status

Register as a CIS subcontractor with HMRC before starting work. Registration reduces deductions from 30% to 20%.

Gross payment status means no deductions at all — you receive the full invoice amount and pay tax through Self Assessment. HMRC grants this if you have a good compliance history and meet turnover and tax return filing requirements.

## Reclaiming overpaid CIS tax

CIS deductions are advance payments of Income Tax and NI. If total deductions exceed your actual tax liability for the year, you reclaim the difference through Self Assessment.

Many construction workers receive a tax refund because CIS deductions do not account for the personal allowance, business expenses, or other reliefs. File your Self Assessment promptly to get refunds quickly.

## Frequently asked questions

### Do I need to register for CIS?

If you work as a subcontractor in construction, register before you start. Unregistered subcontractors face 30% deductions instead of 20%.

### Can CIS deductions exceed my actual tax bill?

Yes. CIS does not account for your personal allowance or expenses. Most subcontractors who file Self Assessment receive a refund.

### Does CIS apply to all construction work?

No. CIS covers building, alteration, repair, and demolition work. It excludes architecture, surveying, carpet fitting, and delivering materials.

## Primary source

https://www.gov.uk/what-is-the-construction-industry-scheme

## Related

- [Self employment basics](https://moneyguide.org.uk/work-earnings/self-employment-basics/)
- [Payments on account explained](https://moneyguide.org.uk/self-assessment/payments-on-account/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.