Guide · CIS

The Construction Industry Scheme,
in plain terms.

The Construction Industry Scheme decides what you deduct before you pay a subcontractor, and what you tell HMRC each month. This page sets out how it works, and how Unibuild runs it.

Published 3 August 2026 · Last reviewed 23 September 2026

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Site supervisor in hi-vis checking a phone on a UK construction site

The scheme itself

What the scheme asks
of a contractor.

CIS applies when you pay a subcontractor for construction work. You verify them with HMRC, deduct at the rate HMRC gives you, pay the deduction over, and file a return every month whether or not you paid anyone.

20%

Verified subcontractor

For a verified subcontractor.

30%

Unverified / unregistered

Where they cannot be verified or are not registered.

Gross payment status

Where HMRC has granted gross payment status.

Who it covers: Contractors paying subcontractors for construction operations. It catches mainstream contractors and also businesses that spend heavily on construction without calling themselves builders.
Verification: Before the first payment you check the subcontractor's CIS status with HMRC, who return a verification number and the rate to apply.
What is deducted from: The labour element. Materials, plant hire paid to a third party, VAT and CIS-exempt costs are taken out of the calculation before the rate is applied.
The monthly return: Due by the 19th of the month following the tax month, which runs the 6th to the 5th. A nil return is still required if you made no payments.
Payment and deduction statements: Each subcontractor receives a statement showing gross, materials and the amount deducted, so they can set it against their own liability. A free payment and deduction statement template is on the downloads page.
The domestic reverse charge: Separate from CIS but bound up with it. For most CIS-reportable supplies between VAT-registered businesses, the customer accounts for the VAT rather than the supplier charging it.

Not tax advice

This page is written for site and commercial staff who need the shape of the scheme, not a definitive statement of it. Rates, thresholds and the treatment of particular costs change. Check the current position with HMRC or your accountant before you rely on it.

The rates and the dates

What you deduct,
and when you file.

The two things worth having to hand.
HMRC gives you the rate when you verify; you do not choose it.

The rates Deduction base Monthly cycle

Gross payment status

The subcontractor holds gross payment status.

How you find out

HMRC confirms it at verification. You pay the full amount and deduct nothing.

20%

Verified & registered

The subcontractor is registered with HMRC under CIS and verifies successfully.

How you find out

HMRC returns a verification number and the 20% rate.

30%

The default

The subcontractor is not registered, or cannot be verified.

How you find out

The default. Applying 20% to an unverified subcontractor leaves you owing the difference.

In, the rate applies

Labour

This is what the rate is applied to.

Plant the subcontractor owns

Own plant is not a deductible material cost.

Out, removed first

Materials

Where genuinely incurred by the subcontractor.

Plant hired from a third party

Along with the fuel for it.

VAT

The deduction is calculated on the net figure.

CIS-exempt costs

Taken out before the rate is applied.

Obligation Deadline If you made no payments

Tax month: 6th ➔ 5th of next monthApplies regardless
Monthly return (CIS300): 19th of following monthNil return still required
Paying the deduction over: 19th post · 22nd electronicNothing to pay
Payment & deduction statements: Within 14 days of month endNone to issue
Verifying a new subcontractor: Before the first paymentNot applicable

Filing the return and paying the deduction over happen on HMRC’s service. Assembling the figures behind them does not, which is what the next section covers.

Chart of the three CIS deduction rates, 0% for gross payment status, 20% for registered and 30% for unregistered subcontractors, worked on an example invoice where the deduction is taken from the labour only — CIS deduction rates of 0%, 20% and 30%, worked on an example invoice. The deduction comes off the labour, not materials or VAT.Free to use, copy, change and share, with no conditions. Download the PNG

The straight answer

Where Unibuild fits
around the scheme.

The deduction and the return pack are produced where the payment is made, against the same subcontract order, so the scheme is not run twice. Unibuild holds the rest of that subcontract too: the order, the variations, the invoices, the payment position and whether that firm should be on your site at all.

Your accounts
package

Filed there

Filing the return to HMRC and paying the deduction over happen where your accountant already works. Unibuild produces the figures they are filed from.

The CIS300, filed
Paying HMRC over
Payroll and the ledgers
The statutory accounts

Stays with accountsFiled

The subcontract
itself

Yes

Unibuild manages the subcontract itself, which is the part your accounts package cannot see.

The order and its terms
Variations, dated and valued
Invoices against the order
The live payment position

Inside · SubcontractorsLive

The part
that matters

Control

Whether you should be instructing that firm at all, which is a question CIS does not ask and a client audit does.

Insurance currency
Accreditation matrix
Nightly expiry checks
Automatic demotion

Inside · RegistersLive

CIS, where the
payment is made

CIS

Deductions are calculated on the labour element as each payment is made, and each tax month closes into a CIS300 return pack ready to file.

UTR and verification reference
HMRC-confirmed deduction rate
Payment and deduction statements
Nil returns included

Inside · SubcontractorsLive

The division of labour Unibuild prepares the return pack Your accounts package files it

One level down

The parts of the scheme
that catch firms out.

This page is the shape of the scheme. These go a level down, into the places where firms actually lose the money or the time.

CIS monthly returns, the date and the penaltiesThe nineteenth, the penalty ladder, and why a nil return is still a return. → Verifying a subcontractor with HMRCWhy verification has to come before the payment, and who carries the cost when the rate is wrong. → Getting gross payment status, and keeping itThe three tests, what one late PAYE payment does to them, and what the status is worth in cash. → What counts as construction work under CISWhich operations fall inside the scheme, which are excluded, and how a mixed contract is treated. → Reclaiming CIS deductions, and the money sitting with HMRCWhere the deductions go if you trade as a limited company, and the money left sitting with HMRC. → The VAT reverse charge, and who accounts for the VATWho accounts for the VAT on a subcontract invoice, and what it does to the cash you were expecting. → End user statements, and what they switch offWhat an end user statement switches off, and why the charge applies by default when nobody gives one. →

Asked in every demo

The follow-up questions.

More on the FAQ page, and the subcontract side is set out in full on the subcontractor management page.

Does Unibuild handle CIS itself?

Yes, in the same system that holds your subcontract orders, invoices and payments, so there is no second version in a spreadsheet. Every subcontractor carries their UTR, verification reference and HMRC-confirmed deduction rate, and deductions are calculated on the labour element only, with materials, third-party plant hire and VAT excluded automatically. Periods work to HMRC tax months, 6th to 5th, so each one assembles itself as you pay and locks when you close it, leaving a complete CIS300 return pack ready to file, nil returns included.

So we still need our accounts package?

Yes, for the ledgers, the VAT return, payroll and the statutory accounts. Your accounts package stays, and Unibuild runs the job up to it. What it holds is the job, the labour, the compliance and the subcontract, CIS included, so the deduction is taken where the payment is made rather than rebuilt from a spreadsheet afterwards. The commercial position then hands over to the package you already file with. Firms that expect one system to do the operation and the accounts equally well are usually disappointed by whichever half was bolted on last.

What is held against each subcontractor payment?

Every payment is recorded against the approved invoice with its date, amount, remarks and the remittance or receipt attached, and each one produces its own A4 payment certificate on the classic subcontract certificate layout. Payment and deduction statements generate and issue within the deadline, retention is tracked against the order it belongs to, and the subcontract exposure report totals orders, invoices and payments across the ledger.

Does the reverse charge affect what we do in Unibuild?

Yes, and it is handled rather than worked around. Invoices carry the domestic reverse charge treatment, and CIS suffered on your own sales invoices is recorded alongside it. On the buying side the subcontractor's invoice is captured against the order with its own document attached, so the cost lands on the right project and the deduction is taken on the labour element only.

Is there a free CIS payment and deduction statement template?

Yes. A free CIS payment and deduction statement is on the downloads page as an editable PDF and a Word document, with every particular regulation 4(8) of the CIS Regulations 2005 requires and a guidance page on the deduction. In Unibuild each subcontractor’s statement comes from the same payments as the monthly return.

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