What is CIS and who does it apply to?

The Construction Industry Scheme (CIS) requires UK contractors to deduct money from subcontractor payments and pass it to HMRC. It applies to businesses in the construction industry — including building, alteration, repair, demolition, and installation work.

What CIS deduction rates apply?

HMRC uses three rates: 0% for subcontractors with gross payment status, 20% for registered and verified subcontractors, and 30% for subcontractors who cannot be verified or are not registered with HMRC.

Is CIS deducted from the full payment or just labour?

CIS is deducted from the labour portion only. The cost of materials the subcontractor has bought and supplied on the job is excluded — so the deduction applies to gross payment minus materials.

What is CIS300 and when is it due?

CIS300 is the monthly return contractors must file with HMRC, showing all CIS payments and deductions made in the previous tax month (6th to 5th). It is due by the 19th of each month.

Do I need CIS accounting software?

Any software that records CIS payments, deductions and subcontractor details can help. Finovo's CIS module tracks subcontractors, generates payment statements and prepares CIS300 data within your main accounting ledger.

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CIS deduction calculator

Enter the gross payment, materials and the subcontractor's CIS status. Get the labour charge, deduction and net payment instantly — then download a simple statement.

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Gross payment (£)

Materials (£)

Cost of materials the subcontractor supplied. Excluded from CIS.

CIS status

Labour: £1,000.00
CIS deduction: £200.00
Net payment: £800.00

Illustration only — not tax or accounting advice. Always verify a subcontractor's CIS status via HMRC before deducting. Materials must be evidenced by invoices.

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CIS deduction — common questions

What is CIS and who does it apply to?: The Construction Industry Scheme (CIS) requires UK contractors to deduct money from subcontractor payments and pass it to HMRC. It applies to businesses in the construction industry — including building, alteration, repair, demolition, and installation work.
What CIS deduction rates apply?: HMRC uses three rates: 0% for subcontractors with gross payment status, 20% for registered and verified subcontractors, and 30% for subcontractors who cannot be verified or are not registered with HMRC.
Is CIS deducted from the full payment or just labour?: CIS is deducted from the labour portion only. The cost of materials the subcontractor has bought and supplied on the job is excluded — so the deduction applies to gross payment minus materials.
What is CIS300 and when is it due?: CIS300 is the monthly return contractors must file with HMRC, showing all CIS payments and deductions made in the previous tax month (6th to 5th). It is due by the 19th of each month. Filing late triggers a £100 minimum penalty.
Do I need CIS accounting software?: Any software that records CIS payments, deductions and subcontractor details can help. Finovo's CIS module tracks verified and unverified subcontractors, generates payment statements and prepares CIS300 data — all within your main accounting ledger.