How CIS Deductions Work

Are you confident that your CIS deductions are being handled correctly?

If you work in construction as a subcontractor, understanding CIS deductions could put hundreds — or even thousands — of pounds back in your pocket.

Here is what every subcontractor needs to know:

📋 How CIS Deductions Actually Work

Under the Construction Industry Scheme, contractors are required to deduct money from your payments before you receive them. That deducted money goes directly to HMRC as an advance payment towards your tax bill.

The rate you are deducted depends on your registration status:

• ✅ 20% — Standard Rate — You are registered with HMRC under CIS. Most subcontractors fall into this category

• ❌ 30% — Higher Rate — You are NOT registered with CIS or HMRC cannot verify your details. This is essentially a penalty rate and costs you significantly more in cash flow

• 🟢 0% — Gross Payment Status — You receive your full payment with NO deductions. This is the gold standard and is available to subcontractors who meet HMRC's turnover, compliance, and business criteria

So Where Does the Money Go?

Here is the part many subcontractors do not fully understand.

The deductions taken from your payments are not a final tax bill — they are advance payments towards what you owe HMRC.

At the end of the tax year, when your accountant completes your Self Assessment:

• Your total CIS deductions are offset against your actual tax liability

• If more has been deducted than you actually owe — and this is very common — HMRC owes YOU a refund

• That refund can be substantial, especially if you have had a quieter year, invested in equipment, or have allowable business expenses that reduce your taxable profit

Where Subcontractors Lose Money

The biggest mistakes we see are:

• Not keeping records of CIS deduction statements from contractors

• Missing legitimate business expenses that reduce the tax owed

• Filing late and losing track of what has been deducted across multiple contractors

• Never applying for Gross Payment Status despite qualifying for it

• Simply not claiming a rebate they are entitled to because the paperwork feels overwhelming

The Smartest Move a Subcontractor Can Make

Working with a specialist CIS accountant means:

• ✅ Deductions are tracked accurately across every contractor you work with

• ✅ Your Self Assessment is filed correctly and on time

• ✅ Every allowable expense is captured — tools, fuel, protective clothing, and more

• ✅ Your rebate is maximised and returned to you as quickly as possible

• ✅ Your eligibility for Gross Payment Status is reviewed — putting more cash in your pocket every single month

At B.R. Pusser & Co, we work with subcontractors across construction and trades every day.

We know the CIS rules inside out — and we make sure our clients are never paying more than they should, never missing a rebate they are owed, and never losing sleep over HMRC paperwork.

Are you confident your CIS deductions are being handled correctly?

Book a Free No obligations call with Brian, or send us a message — we are happy to take a look at your situation with no obligation.