What gets deducted, what does not, and the one line on your invoice that decides how much reaches your bank.
NINO guide · updated 25 September 2026
The Construction Industry Scheme governs how money moves between businesses in construction. When a contractor pays a subcontractor, they do not hand over the full amount: they take a deduction and pass it to HMRC against the subcontractor's tax bill.
It covers construction work broadly defined — building, alterations, repairs, decorating and demolition — so plumbing, electrical work, heating and general building are all inside it. It applies to payments between businesses: work billed directly to a private householder is outside the scheme entirely.
You are registered with HMRC as a subcontractor. This is the normal rate.
You are not registered. Ten points of your own money held back for a registration that costs nothing.
Gross payment status: you are paid in full and settle your tax yourself.
The gap between 30% and 20% is pure administration. If you are subcontracting and not registered, that is the first thing to fix this week.
The deduction applies to the labour element, not to materials. On a £1,000 job made up of £400 of materials and £600 of labour, only the £600 is subject to the deduction.
Which means an invoice written as one lump sum of £1,000 hands over a deduction on your materials that you never owed. Split every document — labour on one side, materials on the other — and the problem disappears. It is the same habit that makes quotes easier to accept, for a completely different reason.
Invoice £1,000: £400 materials, £600 labour. The deduction is 20% of £600 = £120. You are paid £880.
The same £1,000 invoiced as a single line: the deduction is 20% of £1,000 = £200. You are paid £800.
Same job, £80 difference, decided entirely by how the invoice was written.
Gross payment status removes the deduction altogether: the contractor pays you in full and you settle your own tax later. It transforms cash flow, and HMRC sets the bar accordingly — genuine construction work, a minimum turnover (£30,000 for a sole trader), and a clean compliance record, tested on an ongoing basis rather than once.
Worth knowing about early, because the compliance record it depends on is built over the years before you apply.
CIS runs on tax months from the 6th to the 5th. Contractors file their monthly return by the 19th, and pay over the deductions by the 19th (post) or the 22nd (electronic). As a subcontractor you should get a statement of what was deducted — keep every one of them, because that is what proves the tax has already been paid on your behalf.
What NINO does: quotes and pro forma documents that keep labour and materials on separate lines from the very first document, sent as a PDF over WhatsApp, with your customers and appointments in one place. What it does not do: file CIS returns, produce invoices or replace your accountant.
This guide is general information, not tax advice. Rules and figures change every year and your situation may differ: check with your accountant or on gov.uk.
20% if you are registered as a subcontractor with HMRC, 30% if you are not, and 0% if you hold gross payment status. Registering is what moves you from 30% to 20%, and it is free.
No. The deduction applies to the labour element of the payment, not to the cost of materials. That is why labour and materials should always be shown separately on your invoice.
It means the contractor pays you in full with no deduction, and you settle your tax yourself later. You have to pass HMRC's tests: genuine construction work, a minimum turnover — £30,000 for a sole trader — and a clean compliance record.
No. CIS governs payments between businesses in construction. Work billed directly to a private householder falls outside it — which is why the same job can pay very differently depending on who is paying.
NINO is a tool for self-employed tradespeople: you build the quote on site, the customer gets a professional PDF over WhatsApp, and customers, appointments and documents stay in one place. You can start free, with no card.
See also: all guides · NINO in your city.