Industry Specialism
CIS is fiddly, the penalties for getting it wrong are real, and most general accountants either don't understand the practical day-to-day or charge you handsomely to figure it out as they go. We work with a substantial number of trades and construction businesses across Redbridge, Waltham Forest and Epping Forest — the rules are second nature to us, not a research project on your time.
Our construction client base spans the full chain — from a sole trader plumber starting out, through limited company specialist contractors with a handful of staff, to larger main contractors running CIS for 20+ subcontractors. The work we typically handle:
Register with HMRC, get verified, drop your deduction rate from 30% to 20%. Done within a week.
Once you're eligible (turnover, business and compliance tests met), we apply, manage the annual review and protect the status.
Monthly verification of subcontractors, deduction calculations, CIS300 filing, payment statements to subcontractors.
Monthly EPS submissions to offset CIS deductions against PAYE/NIC. End-of-year reclaim of any surplus.
Quarterly VAT returns with proper reverse-charge treatment for construction services between VAT-registered businesses.
Honest, numerical advice on whether incorporation actually saves you money — and when it doesn't.
Annual SA returns with CIS deductions properly claimed as tax already paid. Refunds typically issued within weeks.
MTD-compliant cloud bookkeeping (Xero or FreeAgent) set up for the realities of trades work — cash, project-based, materials/labour split.
CIS in one sentence: a contractor paying a subcontractor for construction work deducts tax at source from the labour element (20% for registered subcontractors, 30% for unregistered, 0% for gross payment status), pays it directly to HMRC, and the subcontractor reclaims it later through their tax return.
HMRC defines two roles under CIS — you can be one, the other, or both:
The scope is broader than you might think. CIS applies to: site preparation, alterations, dismantling, construction, repairs, decorating, demolition. It covers buildings, civil engineering, walls, roads, drains, and a lot more. Some work is specifically excluded — architects, surveyors, scaffolding hire without labour, carpet fitting, delivery of materials only, and a few others.
| Status | Deduction rate on labour | When it applies |
|---|---|---|
| Registered & verified | 20% | Standard rate — subcontractor has registered with HMRC and the contractor has verified them successfully |
| Unregistered | 30% | Subcontractor hasn't registered, or verification failed (often a typo in UTR or name) |
| Gross payment status | 0% | Subcontractor passes HMRC's turnover, business and compliance tests — reviewed annually |
The "labour only" point: CIS only applies to the labour element of an invoice. Materials, equipment hire, plant, fuel and consumables are excluded. Invoice your work as "£X labour + £Y materials" and only the labour part is subject to CIS. This is a constant source of dispute — some contractors deduct CIS on the gross invoice anyway. Push back.
| Day | Action |
|---|---|
| Before each payment | Verify the subcontractor with HMRC (online or via accounting software). Get back: registered/unregistered/gross status. |
| When paying | Apply the correct deduction rate, pay subcontractor the net amount, issue a payment and deduction statement within 14 days. |
| 19th of month | File CIS300 monthly return covering payments made in the previous tax month (6th to 5th). Nil returns required even if no payments. |
| 19th of month (postal) | Pay CIS deductions to HMRC together with PAYE. |
| 22nd of month (electronic) | Electronic payment deadline. |
You're a registered limited company subcontractor (Acme Building Ltd). You've completed a job for a main contractor and the breakdown is:
Total invoice (excluding VAT): £4,600
| Item | Amount |
|---|---|
| Labour | £3,000.00 |
| Materials | £1,200.00 |
| Plant hire | £400.00 |
| Gross invoice | £4,600.00 |
| CIS deduction (20% × labour only) | − £600.00 |
| Net payment to Acme Building Ltd | £4,000.00 |
| (CIS deduction paid to HMRC by contractor) | £600.00 |
The contractor pays Acme £4,000 and pays HMRC £600. That £600 sits as a credit on Acme's HMRC account.
Through the monthly Employer Payment Summary (EPS). Suppose Acme also runs payroll for the director taking a salary, with monthly PAYE/NIC liability of £450:
| Item | Amount |
|---|---|
| PAYE/NIC due this month | £450.00 |
| CIS suffered (reported on EPS) | − £600.00 |
| Net amount Acme pays to HMRC | £0.00 |
| Credit carried forward to next month | £150.00 |
The CIS deduction reduces what you owe HMRC for PAYE. If CIS deductions exceed PAYE in any month, the surplus carries forward; at year-end, any total surplus can be reclaimed as a refund.
For sole trader subcontractors, the process is simpler: the £600 is reported on your Self Assessment tax return as tax already paid. It comes off your total tax bill at the end of the year. If your CIS deductions exceed your tax liability, HMRC issues a refund — commonly seen as the reason many self-employed builders get refunds at year-end.
The cost of getting CIS wrong — lost reclaims, wrong-rate deductions, missed monthly returns, reverse-charge VAT errors — almost always exceeds the cost of using a specialist. We work with trades across Chingford, Loughton, Epping, Chigwell and the wider area.
Book a free 20-min callGross payment status means contractors pay you in full without any CIS deduction. You then account for your tax through Self Assessment (sole traders) or corporation tax (limited companies). The headline benefit is cash flow — you keep the full payment rather than waiting up to 18 months to reclaim it.
HMRC reviews gross payment status annually (a "scheduled review") and can withdraw it if the compliance test is failed. The annual review is automatic — you don't apply, but you can be deselected without warning. Once removed, you can't reapply for 12 months.
Since 1 March 2021, most VAT-registered construction services billed to another VAT-registered construction business use the domestic reverse charge: the customer accounts for the VAT, not the supplier. Your invoice shows no VAT charge — just the net amount and a note explaining reverse charge.
All four conditions must be met:
If any of these is true, you charge VAT normally:
The end-user rule is the most-missed: when an end user confirms in writing that they're an end user, you charge normal VAT. Without that confirmation, default to reverse charge. Many disputes between contractors and subcontractors come from this misunderstanding.
For reverse-charge invoices, include a clear note. HMRC's suggested wording: "Reverse charge: VAT Act 1994 Section 55A applies" or simpler: "Reverse charge: customer to pay the VAT to HMRC". Show the VAT rate (usually 20% or 5%) and the amount the customer must account for, but the invoice total excludes VAT.
We handle the entire switch — professional clearance letter, agent authorisation with HMRC, migration of records. No break in service. Most CIS clients are fully transitioned within 14 days.
Talk to FernsideThe standard CIS deduction is 20% on labour for verified, registered subcontractors. The higher rate of 30% applies to unverified subcontractors. Gross payment status (0%) is available to subcontractors who pass HMRC's turnover, compliance and business tests. Deductions only apply to labour — materials, equipment hire and plant are excluded.
Contractors must file CIS300 by the 19th of the following month, even if no subcontractors were paid (a nil return is still required). CIS deductions are paid to HMRC together with PAYE by the 22nd (electronic) or 19th (postal).
Sole traders claim CIS deductions through Self Assessment — the deductions count as tax already paid and offset against the year's bill, often producing a refund. Limited companies claim through monthly Employer Payment Summary (EPS) submissions, offsetting CIS against PAYE/NIC; surplus can be reclaimed at year-end.
You're paid in full without CIS deduction; you handle tax through SA or CT. To qualify: turnover test (£30k+ sole trader / £30k per director or £100k total for companies); business test (genuine UK construction business); compliance test (clean filing record for past 12 months). Reviewed annually.
Since 1 March 2021, construction services between VAT-registered businesses use the domestic reverse charge: the customer accounts for VAT, not the supplier. You invoice net with a note saying "reverse charge: customer to pay VAT to HMRC". Doesn't apply to end users (homeowners) or non-VAT-registered customers.
For 2026/27, with the new dividend rates (10.75%/35.75%), the limited company tax advantage has narrowed. Below ~£30k profit, sole trader is now usually more tax-efficient. Limited company still wins on liability protection, contracts that require limited status, and ability to retain profits. See our full comparison guide.
Yes. A van wholly for business: 100% of running costs plus capital allowances on the purchase price. Tools/equipment under £1,000: expense directly. Larger items: Annual Investment Allowance (currently £1m). PPE, workwear, professional subscriptions, mobile, accountant fees and business mileage are deductible. Personal-use elements need apportioning.
Anyone working as a subcontractor in construction should register — you get 20% deductions instead of 30%, saving £10 per £100 of labour. As a contractor (paying others), you must register if you spend over £3m on construction in any rolling 12-month period (the "deemed contractor" threshold), or if construction is your main business regardless of spend.