CIS record keeping basics for subcontractors

If you're a subcontractor in construction, you've probably had money deducted from your payments under the Construction Industry Scheme (CIS). Keeping clear records of those deductions matters, because they count towards the tax you've already paid.

What CIS is, in plain English

Under CIS, a contractor deducts a percentage from the labour part of what they pay you and sends it to HMRC on your behalf. It's not an extra tax — it's an advance payment towards your eventual tax and National Insurance. At the end of the year, those deductions are set against what you owe.

The usual deduction rates

• 20% — for subcontractors registered under CIS (the most common rate).
• 30% — for subcontractors who aren't registered.
• 0% (gross payment status) — for those who qualify to be paid without deduction.

Deductions normally apply to the labour element only — materials are usually excluded. Rates and eligibility can change, so treat these as general guidance and confirm the current position with HMRC or your accountant.

Why your records matter

Two reasons. First, those deductions are money you've effectively already paid — if you can't evidence them, you can't easily claim them back. Second, your accountant needs a clean picture of what came in, what was deducted, and what you spent, to work out your position accurately.

What to keep

• Payment and deduction statements from each contractor (these show the CIS deducted).
• Your invoices showing labour and materials separately where relevant.
• Receipts for expenses and materials, linked to the job.
• A running view of total income and total CIS deducted across the year.

Tracking deductions across lots of jobs by hand is where mistakes creep in. SubReady keeps income, expenses and CIS deductions organised where applicable, so the numbers are there when you (or your accountant) need them.