CIS Tax · Deduction Rates · 2026/27
A 30% CIS deduction almost always means one thing: HMRC could not match you to a CIS registration when your contractor checked you. It is fixable, usually within days, and the extra taken is not lost. It comes back through your tax return.
By QuoteDone Editorial Team · Last updated: 9 October 2026 · Checked against GOV.UK guidance and HMRC's CIS manual
You open your payment and deduction statement and see 30% taken from your labour, not 20%. Before you ring the contractor, it helps to know how that rate is set, because in most cases it is not their choice.
Before paying a new subcontractor, a contractor must verify them with HMRC. HMRC then tells the contractor whether you are registered for CIS and which rate to use. If the details they enter do not match a CIS registration, the result is "unmatched", and the contractor may only pay you after deducting at the higher rate of 30%.
The Three CIS Rates and What Sets Each One
| HMRC verification result | Deduction from labour | What it means |
|---|---|---|
| Matched, gross payment status | 0% | You passed HMRC's gross payment tests and are paid in full. |
| Matched, net payment status | 20% | You are registered for CIS and the details match. |
| Unmatched | 30% | HMRC cannot match the details given to a CIS registration. |
Source: GOV.UK – What you must do as a CIS subcontractor
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5 Reasons You Are Stuck on 30% (and Which One Is Yours)
Work down this list in order. Most people find their answer in the first three.
1. You are not registered for CIS
Registering as a subcontractor is not compulsory. If you have not done it, though, contractors must deduct 30% instead of 20%. Registration is the only thing that moves you to the lower rate.
2. You have a UTR but never registered for CIS
This catches a lot of people. A UTR (Unique Taxpayer Reference) sets you up for Self Assessment. CIS registration is a separate step. If you registered as a new business for Self Assessment and chose the subcontractor option, you were registered for both at once. If you skipped that option, you are not on CIS yet. Do not assume your accountant sorted it: ask them directly whether you are registered for CIS.
3. Your details do not match what you registered with
HMRC's guidance says the details a contractor uses must exactly match the details you used to register. A trading name where you registered your legal name, a shortened first name, or one wrong digit in your UTR or National Insurance number can each return "unmatched", even when you are properly registered. A temporary National Insurance number (starting with "TN" or two digits) cannot be verified at all.
4. You work through a limited company, but the contractor used your personal details
A company is verified as the company, not as you. If your invoice carries the company name but the contractor checks your personal UTR and NI number, or the other way round, the details will not match. The table below shows what each business type must give.
5. The contractor verified you before you registered
If a contractor checked you while you were unregistered, they keep deducting at the higher rate until HMRC tells them your status has changed or they verify you again. A contractor only has to verify a returning subcontractor who has not been on one of their CIS returns in the current or last 2 tax years, so a contractor you work for regularly will not recheck you on their own. Tell them you have registered and ask them to verify you again.
What Your Contractor Needs to Verify You
| You are a | Details the contractor gives HMRC |
|---|---|
| Sole trader | Your name, UTR and National Insurance number |
| Limited company | Company name, company UTR and company registration number |
| Partnership | Nominated partner's details, trading name and partnership UTR |
Source: GOV.UK – Verify subcontractors
How to Get Back to 20%: Step by Step
- Read your latest statement. Note the rate, the deduction and any verification number. You will need the number if you call HMRC.
- Find out whether you are registered for CIS. If you are not sure, or you do not know which details you registered with, call the CIS helpline on 0300 200 3210 (Monday to Friday, 8am to 6pm).
- Register if you are not. With a UTR, register online, which GOV.UK calls the quickest way. Without a UTR, register as a new business for Self Assessment and choose the subcontractor option to be registered for both. A postal form is also available. You cannot register as a subcontractor by phone.
- Send every contractor your exact details in writing. Sole trader: name as registered, UTR and NI number. Limited company: company name, company UTR and company registration number. Same spelling, same format, every time.
- Ask each contractor to verify you again. Once HMRC returns a matched result at net payment status, they deduct 20% from later payments. Deductions already made stay as they are until you claim them back.
- Check the next statement. If it still shows 30%, ask the contractor what verification result they received, and call the CIS helpline with your verification number.
From 30% Back to Your Money: The Timeline
| When | What happens |
|---|---|
| Before the first payment | Contractor verifies you. HMRC returns 0%, 20% or 30% (unmatched). |
| Within 14 days of the end of each tax month | Contractor gives you a payment and deduction statement (tax month 6 May to 5 June: statement by 19 June). |
| As soon as you spot 30% | Register or correct your details, then ask the contractor to verify you again. |
| Next payment after a matched result | Deductions drop to 20%. |
| 5 April 2027 | The 2026/27 tax year ends. |
| From 6 April 2027 | File your 2026/27 Self Assessment return and claim back what was over-deducted. |
| 31 January 2028 | Online filing deadline for the 2026/27 return. |
Source: GOV.UK – Make deductions and pay subcontractors
What 30% Costs You in Cash
Figures use a sole trader with no other income and 2026/27 rates: Personal Allowance £12,570, Income Tax 20%, Class 4 NIC 6% on profits between £12,570 and £50,270 (GOV.UK – Self-employed NI rates).
One £3,000 labour invoice
A full year: £40,000 labour, £6,200 expenses
Your tax bill is £5,519.80 either way. The extra £4,000 comes back as a bigger refund, but only after the tax year ends and you file. Until then, it is money you cannot use for fuel, tools or rent.
Same worker, fixed after 8 weeks (£800 labour a week)
Same £40,000 a year as above, spread over 50 working weeks. The faster you fix the mismatch, the less sits with HMRC until next year.
Stop Losing CIS on Materials Too
A 30% rate hurts more when it is taken from the wrong amount. Contractors do not deduct from VAT, materials you paid for directly, plant hired for the job, or fuel (except for travelling). If your invoice shows one total, the contractor may deduct from all of it.
£3,000 invoice: £2,000 labour + £1,000 materials you bought
Before your next invoice goes out, run through this:
- ✅ Your name (or company name) exactly as registered with HMRC
- ✅ Your UTR, checked digit by digit
- ✅ Labour and materials on separate lines
- ✅ VAT shown separately, if you are VAT registered
- ✅ A copy of every payment and deduction statement saved for your tax return
Want 0% Instead of 20%?
Gross payment status means contractors pay you in full and you settle your tax through Self Assessment. The turnover test is £30,000 a year for a sole trader, and £30,000 per director or at least £100,000 for the whole company. Turnover is measured over the last 12 months, excluding VAT and the cost of materials, and you must also pass HMRC's business and compliance tests.
Frequently Asked Questions
Why is my contractor deducting 30% CIS?
Because HMRC could not match you to a CIS registration when your contractor verified you. That happens if you have not registered for CIS, or if the details the contractor gave HMRC do not exactly match the details you registered with. For a sole trader that means your name, UTR and National Insurance number. For a company it means the company name, UTR and registration number.
Is having a UTR the same as being registered for CIS?
No. A UTR identifies you for Self Assessment. CIS registration is a separate step. If you already have a UTR, you register for CIS online. If you do not, you can register as a new business for Self Assessment and choose the subcontractor option, which registers you for both at the same time.
Can I register for CIS over the phone?
No. HMRC says subcontractors cannot register for CIS over the phone. Register online or by post. You can still call the CIS helpline on 0300 200 3210, Monday to Friday, 8am to 6pm, with general CIS questions.
How do I get my deduction rate changed from 30% to 20%?
Register for CIS if you have not already, make sure the details you give your contractor exactly match the details you registered with, and ask the contractor to verify you again. Once HMRC returns a matched result at net payment status, the contractor deducts 20% from later payments. It does not change deductions already made.
Do I get the extra 10% back?
Yes, through your Self Assessment return. All CIS deductions, including those at 30%, count towards your tax bill for the year. If the total deducted is more than you owe, HMRC repays the difference after you file. Deductions taken in the 2026/27 tax year go on the return you can file from 6 April 2027.
Can my contractor choose to deduct 30%?
No. The contractor must use the rate HMRC gives when it verifies you. If your statement shows 30% but you were verified at 20%, ask the contractor to correct it.
What is the verification number on my CIS statement?
If a contractor deducts at the higher rate because you could not be verified, your payment and deduction statement must show a verification number. HMRC's manual gives the format V1234567890/A. Quote it when you contact HMRC or your contractor to sort out the mismatch.
Does CIS apply to materials?
No. Contractors do not deduct from materials you paid for directly, VAT, plant hired for the job, or fuel except for travelling. Show labour and materials on separate lines on your invoice so the deduction is taken from the labour only.
Important: This article is general information about the Construction Industry Scheme, not personal tax advice. Your deduction rate depends on your registration and HMRC's verification result. Always verify against GOV.UK or speak to a qualified accountant.
Author: QuoteDone Editorial Team · Last updated: 9 October 2026
Sources: GOV.UK – What you must do as a CIS subcontractor · GOV.UK – How to register (subcontractor) · GOV.UK – Verify subcontractors · GOV.UK – Make deductions and pay subcontractors · GOV.UK – Gross payment status · GOV.UK – CIS helpline · HMRC manual CISR12160 – Payment and deduction statement · HMRC manual CISR51120 – Unmatched verification · GOV.UK – Self-employed National Insurance rates
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