GOV.UK says contractors must deduct 20% from a registered subcontractor's payments. If a subcontractor does not register for the scheme, contractors must deduct 30% instead. Sole traders, owners of limited companies and partners can all register.
The deductions are not an extra tax. They are advance payments towards the subcontractor's tax and National Insurance bill, set against the final bill at the end of the year. But a 30% rate means more of your money is held by HMRC until then.
On £4,200 of labour (Example 1 in our worked examples), the difference between 30% and 20% is £420.00 on a single invoice.
Before paying a new subcontractor, the contractor verifies them with HMRC. HMRC then tells the contractor which rate to apply: 20%, 30% or gross (0%).
Employees do not register for CIS. If you are not sure whether you are employed or self-employed, GOV.UK has an employment status checker.
Source: GOV.UK — what you must do as a CIS subcontractor.
Last checked: 19 October 2026. Estimates only, not tax advice.
You get 20% by registering for CIS. HMRC tells the contractor your rate when they verify you.
No. Like the 20% deduction, it counts towards your tax and National Insurance for the year.