{"id":159,"date":"2019-05-29T12:50:53","date_gmt":"2019-05-29T11:50:53","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=159"},"modified":"2026-01-28T07:44:45","modified_gmt":"2026-01-28T07:44:45","slug":"how-does-cis-tax-work","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/","title":{"rendered":"How does CIS tax work?"},"content":{"rendered":"\n<p><strong>CIS tax <\/strong>(<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/construction-industry-scheme-cis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Construction Industry Scheme<\/a>) is a deduction-based scheme set up by HMRC to collect income tax throughout the year from those who carry out construction work.<\/p>\n\n\n\n<p>Here\u2019s how it all works\u2026<\/p>\n\n\n\n<p>Contractors deduct <strong>CIS tax <\/strong>on behalf of their workers (subcontractors) and send the money directly to HMRC as tax payments.&nbsp;<\/p>\n\n\n\n<p>Whilst it is mandatory for contractors to register for CIS, this is a choice for subcontractors. They don\u2019t have to but whether you\u2019re registered for CIS or not determines the amount of tax you pay:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Registered subcontractors<\/strong>: 20% <strong>CIS tax<\/strong> deduction<\/li>\n\n\n\n<li><strong>Unregistered subcontractors<\/strong>: 30% <strong>CIS tax<\/strong> deduction<\/li>\n<\/ul>\n\n\n\n<p>That extra 10% can make a big difference! If you want to avoid overpaying, it\u2019s worth <a href=\"https:\/\/taxfix.com\/en-uk\/how-to-register-for-cis\/\" target=\"_blank\" rel=\"noreferrer noopener\">registering<\/a>.<\/p>\n\n\n<div class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return.png\" width=\"1280\" height=\"672\" srcset=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-300x158.png 300w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-1024x538.png 1024w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-768x403.png 768w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return.png 1280w\" class=\"wp-block-image__media\" sizes=\"auto, (min-width: 1000px) 768px, calc(100vw - 48px)\" alt=\"How to file a tax return\"><\/div>\n\n\n<h2 class=\"wp-block-heading\">An example of how CIS tax works:<\/h2>\n\n\n\n<p>Louie is a contractor. He hires John to carry out some construction work. John is a subcontractor. Every month John is owed a gross payment of \u00a31,500 pounds for his work (gross payment is simply how much you make before taxes and other deductions).<\/p>\n\n\n\n<p>As a CIS rule, contractors are required to \u2018withhold\u2019 taxes and pay subcontractors their net pay (earnings after tax is deducted).&nbsp;<\/p>\n\n\n\n<p>So Louie deducts \u00a3300 each month from John\u2019s wages and pays him \u00a31200. The deducted \u00a3300 is sent to HMRC. This will count as an \u2018advance payment\u2019 towards John\u2019s income tax and national insurance contributions.<\/p>\n\n\n\n<p>Louie also provides John with a CIS statement as proof of tax deductions. In the construction world, this is basically a payslip.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a CIS deduction?<\/h2>\n\n\n\n<p>A CIS deduction is the tax amount that contractors withhold from a subcontractor&#8217;s payment before passing it to HMRC. These deductions count as advance payments toward the subcontractor\u2019s income tax and National Insurance contributions.<\/p>\n\n\n\n<p>If too much tax is deducted, subcontractors may be eligible for a <strong>CIS tax<\/strong> refund.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How do CIS tax refunds work?<\/h2>\n\n\n\n<p>If you\u2019ve overpaid <strong>CIS tax<\/strong>, you may be able to claim a refund at the end of the tax year.<\/p>\n\n\n\n<p>Let\u2019s have another look at John:<\/p>\n\n\n\n<p>\ud83d\udc49 Let\u2019s say John\u2019s annual income is \u00a318,000:<\/p>\n\n\n\n<p>\ud83d\udc49 John owes HMRC exactly \u00a32,370.20 &#8211; that\u2019s \u00a31,230 for income tax&nbsp; and \u00a31,015 for national insurance (in the 22\/23 tax year) \ud83e\udd13<\/p>\n\n\n\n<p>\ud83d\udc49 However, Louie deducted <strong>CIS tax<\/strong> totaling \u00a33,600 throughout the year. (Yep, Louie\u2019s made a mistake)<\/p>\n\n\n\n<p>\ud83d\udc49 John has overpaid, meaning he is due a refund<\/p>\n\n\n\n<p>HMRC will usually alert you automatically when you\u2019ve paid too much or too little tax. Otherwise, you can claim a refund <a href=\"https:\/\/www.gov.uk\/guidance\/claim-a-refund-of-construction-industry-scheme-deductions-if-youre-a-limited-company\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is the CIS rebate?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/v2kYgc9PlOE?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Need to file your CIS tax return?<\/h2>\n\n\n\n<p>Well, it\u2019s your lucky day! Get your <strong>CIS tax return<\/strong> filed by an accredited accountant.&nbsp;<\/p>\n\n\n\n<p>Our CIS accountants have specialist knowledge of construction worker taxes, including what expenses you can claim, how to maximise your profit, and more. They can even claim a CIS refund where due.<\/p>\n\n\n\n<p>Find out more <a href=\"https:\/\/taxfix.com\/en-uk\/self-assessment-tax-returns\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>CIS tax (Construction Industry Scheme) is a deduction-based scheme set up by HMRC to collect income tax throughout the year from those who carry out construction work. Here\u2019s how it all works\u2026 Contractors deduct CIS tax on behalf of their workers (subcontractors) and send the money directly to HMRC as tax payments.&nbsp; Whilst it is [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[443,440],"tags":[188,102,411],"class_list":["post-159","post","type-post","status-publish","format-standard","hentry","category-construction-and-labourers","category-self-employed-tax-returns","tag-construction-industry-scheme","tag-hmrc","tag-self-employed"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How does CIS tax work? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"CIS tax is a deduction-based scheme set up by HMRC to collect income tax throughout the year from those who carry out construction work.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How does CIS tax work? 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&#8211; Taxfix","description":"CIS tax is a deduction-based scheme set up by HMRC to collect income tax throughout the year from those who carry out construction work.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/","og_locale":"en_GB","og_type":"article","og_title":"How does CIS tax work? &#8211; Taxfix","og_description":"CIS tax is a deduction-based scheme set up by HMRC to collect income tax throughout the year from those who carry out construction work.","og_url":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/","og_site_name":"Taxfix","article_publisher":"https:\/\/www.facebook.com\/taxfix_uk","article_published_time":"2019-05-29T11:50:53+00:00","article_modified_time":"2026-01-28T07:44:45+00:00","og_image":[{"url":"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/25Q3_TS_Rebrand_UK_Website_Content_Blog-and-guides_how-to-file-a-tax-return-1024x538.png","type":"","width":"","height":""}],"author":"Gemma Doswell","twitter_card":"summary_large_image","twitter_creator":"@Taxfix","twitter_site":"@Taxfix","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/","url":"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/how-does-cis-tax-work\/","name":"How does CIS tax work? 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