What are the CIS deduction rates?

There are 3 CIS rates in October 2026: 20% if you are registered and verified, 30% if you are not, and 0% if you hold gross payment status. HMRC sets which one your contractor uses.

Under the Construction Industry Scheme (CIS), a contractor takes money off your pay and sends it to HMRC. It is not an extra tax. GOV.UK calls it an advance payment towards your Income Tax and National Insurance, and you settle up on your tax return after the year ends.

The three rates

The rates are on GOV.UK's contractor guidance, checked on 16 October 2026. If you have gross payment status, nothing is taken, and you pay all your tax and National Insurance yourself after the year ends.

Who sets your rate

Your contractor does not pick the rate. Before paying a new subcontractor, the contractor must verify them with HMRC, online or through CIS software. HMRC then says whether to deduct 20%, 30% or nothing.

To verify a sole trader, the contractor gives HMRC your name, Unique Taxpayer Reference (UTR) and National Insurance number. These must exactly match the details you registered with. GOV.UK says you get 20% only if you are registered and the contractor can verify you. If either fails, it is 30%.

A contractor who has included you on a CIS return in the current or last 2 tax years does not need to verify you again. They keep paying you on the same basis as last time until HMRC tells them otherwise.

What the deduction is taken from

The rate is not applied to your whole invoice. The contractor starts with the gross amount and takes off what you paid for:

• VAT
• materials you bought yourself
• consumable stores, meaning equipment that is now unusable
• fuel used, except fuel for travelling
• plant hired for the job
• manufacturing or prefabricating materials

The rate applies to what is left. CIS 340 also says travel and subsistence paid to you are part of the amount the deduction is taken from.

A worked example. You are a registered tiler and invoice £1,500: £1,000 labour, £400 of tiles and adhesive you bought, and £100 for travel. You are not VAT registered. The contractor takes off the £400 of materials, leaving £1,100. At 20% the deduction is £220 and you are paid £1,280. If you were unregistered, the deduction at 30% would be £330 and you would be paid £1,170.

What this means for you

The rate decides your cash flow during the year, not your final tax bill. A registered subcontractor pays 20% up front. Your actual bill depends on your profit after costs, your personal allowance and your National Insurance, worked out on your tax return.

Many subcontractors on 20% have more taken than they owe. Over-deducted CIS is claimed back through your tax return. The sooner after 5 April you file, the sooner HMRC can repay you.

If you are on 30%, the extra 10% is held by HMRC until then too. Fixing your registration or details now stops the extra being taken from the next payment.

Steps to check you are on the right rate

1. Find your latest monthly payment and deduction statement. Contractors must give you one within 14 days of the end of each tax month.
2. Divide the deduction by the amount it was taken from, after materials. You should see 20%, 30% or 0%.
3. Check the materials figure on the statement matches what you paid. Keep receipts, as contractors may ask for evidence.
4. If you see 30% and you are registered, check the name and UTR your contractor holds match your CIS registration exactly.
5. If the figures look wrong, speak to your contractor first, as GOV.UK advises.
6. Keep every statement for your tax return. You will need the totals to claim back any overpayment.

Use the free MTD check to see when Making Tax Digital starts for you, and visit the trades section for more on CIS.