If you work in construction and money is being deducted from your payments before you receive them, those are CIS deductions and they need to be handled correctly or you risk losing money you are entitled to reclaim. This guide explains how the Construction Industry Scheme works, what your obligations are, and how to make sure your CIS position does not cost you more than it should.

Why CIS is harder to manage than most people expect

The Construction Industry Scheme was designed to tackle tax evasion in the construction sector, but the administrative weight of it falls heavily on the people doing the actual work. As a subcontractor, you are not just building things. You are also responsible for making sure your deductions are recorded correctly, your tax position is accurate, and your reclaims are submitted on time.

From 6 April 2026, new HMRC rules require contractors to file a nil return each month or notify HMRC in advance if they have made no subcontractor payments. This change was designed to reduce erroneous late filing penalties, but it also adds another layer of compliance that contractors and subcontractors need to track. If your contractor misses their filing obligation, it can create knock-on problems for your own records.

Where most subcontractors run into trouble

The problems I see most often are not caused by dishonesty. They are caused by a system that puts significant admin on the shoulders of people who are trained to lay foundations or fit electrics, not navigate HMRC filing requirements. Here are the two areas where things go wrong most frequently.

Trusting your contractor to get it right

Your contractor is responsible for verifying your tax status with HMRC and deducting the correct rate. But real-world cases show contractors regularly applying the wrong deduction rate, which means too much tax is withheld from your payments. Recovering that money requires you to have accurate records of what should have been deducted versus what actually was. Without those records, the reclaim process becomes slow and difficult.

Leaving CIS deductions unreclaimed

CIS deductions are not lost forever, but they do not reclaim themselves. The money withheld from your payments sits with HMRC until you file a self-assessment tax return and offset those deductions against your tax liability. If you are not filing a self-assessment, or if you are filing without including your CIS statements, you are leaving money on the table. Timing mismatches in the CIS system are a documented source of cash flow pressure for subcontractors across the UK.

A clear process for getting your CIS position sorted

Getting your CIS handled properly comes down to four steps. None of them are complicated on their own. The difficulty is in doing all of them consistently, every month, on top of running a business. Here is what the process looks like when it is done correctly.

1. Collect your CIS deduction statements from every contractor you work with. These statements show the gross payment, the deduction made, and the net amount you received. You need one for every payment, not just at year-end.
2. Confirm your tax status with HMRC. The deduction rate applied to your payments depends on whether you are registered with CIS and whether you have gross payment status. If your status is wrong in HMRC’s system, you will be over-deducted until it is corrected.
3. File your self-assessment tax return and include all CIS deductions. This is how you reclaim the tax that has been withheld throughout the year. The deductions offset your income tax liability, and if more was deducted than you owe, HMRC refunds the difference.

I handle all of this for my clients in Suffolk directly. There is no handover to a junior member of staff, no portal to figure out on your own. You send me your statements, I take care of the filing.

What it actually costs to manage CIS, and what it costs not to

There is a real cost to handling CIS yourself, even if you do not pay anyone to do it. Your time has a value. If you spend two hours a month gathering statements, cross-checking deductions, and filing returns, that is two hours you are not on site earning money. At £250 per day, that is roughly £62 in lost earnings every month on admin alone. The comparison below is based on what I actually offer, not a hypothetical firm.

What to do today if your CIS is behind

If you have been putting this off, the most important thing to know is that wherever you are starting from is a valid starting point. I work with subcontractors who have not filed for a full year and subcontractors who just want someone to take over going forward. Both situations are manageable. Here is what to do right now.

• Gather whatever CIS deduction statements you have. Even incomplete records give us something to work from. If you are missing statements, I can help you work out what to request from your contractors.
• Check whether you have a Unique Taxpayer Reference (UTR). If you have never registered for self-assessment, you may not have one yet. Getting this in place is the first step before any CIS reclaim can be made.