Deduction rates
0%, 20% or 30%.
When a contractor verifies you with HMRC, HMRC tells them which rate to deduct. Deductions are taken from the labour part of an invoice, not from materials or VAT.
| Rate | Who it applies to |
|---|---|
| 20% | Subcontractors registered for CIS whom the contractor has verified with HMRC. |
| 30% | Subcontractors who aren't registered, or whom HMRC can't match when the contractor tries to verify them. |
| 0% | Subcontractors HMRC has granted gross payment status. Nothing is deducted. |
For subcontractors
Paying 30%? You probably don't need to be.
Most subcontractors paying 30% simply haven't registered, or their contractor couldn't match their details. Register, share your details with your contractor, and the deduction drops to 20%. Anything overpaid comes back through your tax return.
- Register for CIS, free
- Get verified at the lower rate
- Keep a record of every deduction for your reclaim
For contractors
What the scheme asks of you.
CIS Manager handles each of these. See how.
Verify
Check each new subcontractor with HMRC before you pay them, to find out which rate to deduct.
Deduct and statement
Take the right deduction from each payment and give every subcontractor a monthly statement of it.
File monthly
Send HMRC a CIS300 return for each tax month (the 6th to the 5th) by the 19th. Late returns attract penalties.