CIS Deductions Calculator

For the 2026/27 tax year, contractors must deduct 20% from payments to registered subcontractors and 30% from those who are not registered. These deductions are taken from the labour portion of the invoice only, excluding materials. All rates and rules are confirmed by HMRC for the current tax year.

Subcontractors with gross payment status receive their full invoice amount without any deduction, provided they meet HMRC's turnover and tax compliance tests. To qualify, a business must have an average annual turnover of at least £30,000 over the last three years and be up to date with all tax returns and payments. Contractors must verify this status via the HMRC online service before making any payments.

Yes, you can reclaim any overpaid CIS deductions through your Self Assessment tax return or by applying for repayment directly with HMRC. The deducted amounts are treated as advance payments towards your income tax and Class 4 National Insurance liabilities. If your total tax liability for the year is lower than the deductions made, HMRC will issue a refund.

To verify a subcontractor, you need their Unique Taxpayer Reference (UTR), their National Insurance number, and their business name or trading name. You can use the HMRC CIS verification service to instantly confirm whether they are registered for gross or net payment. Failure to verify a subcontractor correctly can result in penalties for the contractor.

Contractors must submit their monthly CIS returns to HMRC by the 19th day of the following tax month, even if no payments were made. These returns detail all payments made to subcontractors and the deductions applied during that period. Late submissions incur fixed penalties, so strict adherence to the monthly deadline is essential for compliance.