Question 1

What is the CIS deduction rate for 2025/26?

Accepted Answer

There are three rates. Registered subcontractors have 20% deducted from their labour element. Unregistered subcontractors have 30% deducted. Subcontractors with gross payment status have 0% deducted and receive the full amount. The deduction only applies to the labour portion — materials are always passed through in full.

Question 2

Why are materials excluded from CIS deductions?

Accepted Answer

CIS is a prepayment of income tax on your trading profit, not your turnover. Materials are a business cost, not profit — so HMRC only applies the deduction to the labour element (gross payment minus the cost of materials you supplied). Always keep receipts for materials so your contractor can correctly exclude them.

Question 3

How do I register as a CIS subcontractor?

Accepted Answer

Register with HMRC online or by calling the CIS helpline (0300 200 3210). You'll need your UTR (Unique Taxpayer Reference) and National Insurance number. Once registered, contractors will deduct 20% instead of the 30% unregistered rate. Registration takes a few minutes and the saving is immediate.

Question 4

How do I get gross payment status?

Accepted Answer

Apply to HMRC once you meet three tests: the Business test (you work in construction), the Turnover test (at least £30,000 annual turnover excluding materials and VAT for sole traders, or £100,000 as a company director), and the Compliance test (all tax returns filed and all tax paid on time for the past 12 months). HMRC reviews your status annually.

Question 5

Can I reclaim overpaid CIS deductions?

Accepted Answer

Yes — CIS deductions are advance payments of income tax. If your deductions exceed your actual tax and NIC liability (which is common when you have significant expenses), you can reclaim the difference through your self-assessment tax return. Many subcontractors receive refunds of £1,000–£5,000 per year. The deadline to claim is 31 January, four years after the relevant tax year.

Question 6

What counts as materials for CIS purposes?

Accepted Answer

Materials are the physical goods that become part of the construction work — bricks, timber, plumbing fittings, electrical cable, etc. Plant hire, scaffolding hire, and consumables used in the process are also typically excluded from the deduction base. Labour, supervision, and travel costs are not materials and must be included in the figure the deduction is calculated on.

CIS Tax Calculator 2025/26 — Construction Industry Scheme

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