Sector Guides
Construction: CIS Payslip Explained
Wondering why 20% or 30% is being taken from your pay? We explain how the Construction Industry Scheme works, what your deductions mean, and how to get your tax refund.
What is the Construction Industry Scheme (CIS)?
CIS is a tax deduction scheme set up by HMRC specifically for self-employed workers in the construction industry. Under CIS, contractors deduct money from a subcontractor's payments and pass it to HMRC.
These deductions count as advance payments towards your tax and National Insurance bill.
Why your payslip shows a 20% or 30% deduction
Your deduction rate depends on your registration status with HMRC:
- 20% Deduction: You are registered for CIS. This is the standard rate.
- 30% Deduction: You are NOT registered for CIS. Your contractor is legally required to take an extra 10%. You should register for CIS immediately to lower your rate.
Gross vs Net under CIS
Unlike standard PAYE employees, the gross amount on your CIS statement does not include any tax-free personal allowance. The 20% is taken from the very first pound you earn (after excluding the cost of materials).
Because the 20% deduction doesn't factor in your £12,570 tax-free personal allowance or your business expenses, almost all CIS subcontractors overpay tax during the year.
Are you owed a CIS tax refund?
Use our calculator to estimate your refund based on your income and expenses.
Calculate my CIS refund →What is Gross Payment Status?
Some subcontractors apply for Gross Payment Status. If you have this, your contractor will pay you in full, with no deductions at all (0%).
To qualify for Gross Payment Status, you must pass certain tests set by HMRC:
- You must have paid your tax and NI on time in the past.
- Your business must do construction work in the UK.
- Your turnover must exceed a minimum threshold (typically £30,000 for a sole trader).
Checking your deduction statement
Your contractor must give you a monthly statement showing how much you've been paid and how much has been deducted. You must keep these statements safe, as you will need them when you file your Self Assessment tax return to claim back your overpaid tax.