CIS for subcontractors: getting deductions back, and applying for gross payment
Deductions taken under the Construction Industry Scheme are advance payments of your tax. How sole traders and companies claim them back, and what it takes to be paid in full.
When a contractor pays you under CIS, they deduct 20% if you are registered and 30% if you are not, and pass it to HMRC. Those deductions count towards your tax and National Insurance. The question is how quickly you get the benefit.
Sole traders and partners
Report your total pay before deductions as income on your tax return, and the deductions as CIS deductions. HMRC sets them against your bill and repays any excess. Filing early in the tax year, rather than in January, brings a repayment forward by months.
Limited companies
A company uses its payroll scheme. Each month, it sends an Employer Payment Summary showing CIS deductions suffered so far in the year, and HMRC takes them off the PAYE and National Insurance it owes. Anything left at the end of the tax year can be reclaimed. Do not claim CIS deductions on the Corporation Tax return; that can bring a penalty.
Turnover excludes VAT and the cost of materials. Partnerships and companies can meet either test; companies controlled by five or fewer people need £30,000 for each of them.
Show the data
| Sole trader | £30,000 |
|---|---|
| Per partner or director | £30,000 |
| Partnership or company, whole business | £100,000 |
Gross payment status
With gross payment status, contractors pay you in full and you settle your own tax. As well as the turnover test, HMRC checks that your business is run through a bank account and that you have filed and paid your tax on time. It reviews status regularly, so a late payment can cost you it.
More on
This insight is general information, not advice for your circumstances. Talk to us before acting on it.