CIS Deduction Rates

Short Definition: The percentage tax deducted from subcontractor payments under CIS.

Long Definition: CIS deduction rates determine how much tax is taken from a subcontractor’s payment before they receive it. There are three main rates: 20% for registered subcontractors, 30% for those not registered, and 0% for those with gross payment status. These deductions are applied only to the labour portion of a job, not materials. Understanding your deduction rate is important because it directly affects your cash flow and how much you may need to reclaim later through your Self Assessment tax return.