Is Your Contractor
Deducting 30%
Instead of 20%?
Stop losing 10% of your paycheck to simple paperwork errors. Here's exactly why it happens — and how to fix it today.
Per. Single. Invoice.
You've put in a solid week on site. You've grafted through the British weather — only to open your remittance advice and see 30% deducted instead of the expected 20%. Before you blame the main contractor, you need to understand how the Construction Industry Scheme really works.
What is the Construction Industry Scheme?
The CIS is HMRC's system for collecting tax directly from subcontractors' pay before it reaches them. When a contractor hires you, they are legally required to verify your details with HMRC. HMRC then instructs them on exactly what rate to deduct. The contractor has no discretion — if they ignore HMRC's instruction, they face massive penalties.
In most cases, a 30% deduction is not a mistake by your contractor. It's a direct instruction from HMRC because they cannot verify who you are.
The Three CIS Deduction Rates
HMRC operates three deduction rates under CIS. The rate you get isn't chosen by your contractor — it's dictated entirely by your registration status.
Gross Payment Status
You receive 100% of your invoice. Only available to subcontractors who pass HMRC's turnover and compliance tests. The gold standard — apply once you're established.
Standard Rate
The most common rate for registered subcontractors with a valid UTR and active CIS registration. This is where you want to be.
Higher Rate — Penalty
Applied when HMRC cannot verify your details. This is the fastest way to damage your cash flow and the most common source of CIS disputes.
Why Are You Being Deducted 30%?
-
01
You haven't registered for CIS
Having a UTR number is not the same as being registered for CIS. These are two separate things. A UTR gets you in the HMRC system — CIS registration is what sets your deduction rate to 20%. Many subbies make this mistake and have no idea they're sitting on a higher rate.
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02
Mismatched details
Does the name on your invoices match your HMRC records exactly? Even a small discrepancy — a middle name, a shortened business name, a single letter difference — can cause HMRC's verification to fail, automatically triggering the 30% rate. Check your records before your next job.
Always separate Labour from Materials on every invoice. CIS deductions apply only to the labour portion — materials are exempt. If you send a lump-sum invoice, many contractors will deduct from the full amount to protect themselves from HMRC penalties.
A properly formatted CIS invoice — with labour and materials clearly itemised, your UTR number included, and your registered business name matching HMRC records — removes any ambiguity. Tools like QuoteDone generate CIS-compliant invoices automatically, so every line is protected from the moment you send.