To be paid correctly by a contractor, make sure you give them the exact same legal business name or trading name you gave when you registered for the Construction Industry Scheme (CIS). You should also give them your Unique Taxpayer Reference (UTR) so they can verify you.
If you do not, this could affect how much you get paid.
When a contractor pays you under CIS, they’ll normally make deductions at the standard rate of 20%.
Contractors will make deductions at a higher rate of 30% if:
Your contractor should give you monthly statements of payments and deductions. Use them to calculate whether you still owe tax and National Insurance to HM Revenue and Customs (HMRC) or are due a refund.
Gross payment status
You can apply for gross payment status when you register for CIS. This means the contractor will not make deductions from your payments and you’ll pay all your tax and National Insurance at the end of the tax year.
What does not count as your pay
Contractors will not make a CIS deduction from amounts you charge on your invoice for:
- equipment which is now unusable (‘consumable stores’)
- plant hired for the job
- manufacturing or prefabricating materials
- materials that you have paid for directly
Your contractor may ask you for evidence (for example, receipts) that you directly paid for materials. If you do not have any evidence, the contractor will estimate the cost of the materials.