CIS Payment Statements Explained

Every time a contractor pays you under CIS, they provide a payment statement. This document is your proof of how much tax was deducted and sent to HMRC. You need these statements to reclaim overpaid CIS through Self Assessment — so understanding what they say matters.

What a CIS Payment Statement Looks Like

A CIS payment statement includes specific information that contractors are required to provide. Here's what each line means:

Field	What it shows
Contractor's name and details	Who made the payment
Your name and UTR	Confirms it's your record
Tax month	The HMRC tax month the payment falls in
Gross amount	Your full invoice total before any deductions
Cost of materials	Materials you supplied (not subject to CIS)
Amount liable to deduction	Gross minus materials — CIS is calculated on this
CIS deduction	The tax withheld (20% or 30% of the liable amount)
Net payment	What you actually receive
Verification number	HMRC's reference from when the contractor verified you

Reading a Statement: Step by Step

Here's a typical CIS payment statement broken down:

Contractor: ABC Construction Ltd
Subcontractor: James Wilson
UTR: 12345 67890
Tax month: Month 12 (6 March - 5 April)

Gross amount:                £2,500.00
Less: Cost of materials      £  400.00
Amount liable to deduction:  £2,100.00
CIS deduction (20%):         £  420.00
Net payment:                 £2,080.00
Verification number: V1234567890

How the numbers work:

1. James invoiced £2,500 for the job
2. He supplied £400 of materials (bricks, fittings)
3. CIS only applies to the labour portion: £2,500 - £400 = £2,100
4. At 20%, the deduction is £2,100 × 0.20 = £420
5. James receives £2,500 - £420 = £2,080
6. The contractor sends £420 to HMRC

The £400 materials cost is not subject to CIS deduction — James gets that portion in full.

The CIS 20% Deduction Rate

The 20% rate applies if you're registered for CIS with HMRC. This is the standard rate for most subcontractors.

What 20% is calculated on:

CIS is not 20% of your total invoice. It's 20% of the amount liable to deduction — which is your gross payment minus any qualifying materials.

Scenario	Gross	Materials	Liable amount	CIS at 20%	You receive
Labour only	£1,000	£0	£1,000	£200	£800
With materials	£1,000	£300	£700	£140	£860
Large job	£5,000	£1,200	£3,800	£760	£4,240

What Counts as Materials?

Materials that become part of the construction work are deducted before CIS is calculated. This reduces the amount subject to the 20% deduction.

Qualifies as materials:

• Building supplies (bricks, timber, cement, plaster)
• Fixtures and fittings you install (taps, sockets, radiators)
• Equipment that becomes part of the building (boilers, wiring)

Does not qualify:

• Your own tools and equipment
• Protective clothing and safety gear
• Scaffolding hire
• Fuel for your vehicle
• Plant hire (unless it becomes part of the structure)

Keep receipts for all materials. If a contractor doesn't deduct your materials before calculating CIS, you're paying more tax than necessary on each payment.

How to Check Your Statement Is Correct

Every time you receive a statement, verify three things:

1. Is the Gross Amount Right?

Compare the gross amount on the statement to your original invoice. They need to match. If the contractor has reduced the gross amount without explanation, query it immediately.

2. Are Materials Deducted?

If you supplied materials for the job, check they've been subtracted before CIS was calculated. Common mistakes:

• Contractor forgets to deduct materials entirely
• Materials figure is wrong (too low)
• Plant hire incorrectly included as materials

3. Is the Right Rate Applied?

Check the deduction percentage:

Your status	Expected rate	If you see this instead
Registered for CIS	20%	30% = contractor may not have verified you
Gross payment status	0%	20% = verification issue
Not registered	30%	This is correct (but consider registering)

What to Do If the Wrong Rate Is Applied

If your statement shows 30% but you're registered for 20%, something went wrong during verification.

Step 1: Contact the contractor

Ask them to check your verification with HMRC. Common causes:

• They used the wrong UTR or NI number
• They didn't verify you before payment
• Your CIS registration has lapsed

Step 2: Check your own registration

Log into your HMRC online account to confirm your CIS registration is active. If you've recently changed your name, address, or business structure, HMRC may not have updated their records.

Step 3: Get it corrected

The contractor can re-verify you and apply the correct rate going forward. For payments already made at the wrong rate, the extra deduction is still credited to you at HMRC — you'll get it back through Self Assessment.

You won't lose money permanently. Whether 20% or 30% is deducted, it all counts as advance tax. The difference is cash flow — at 30%, more of your money is tied up with HMRC until you file your return.

CIS Statements and VAT

If you're VAT-registered, CIS is calculated on the VAT-exclusive amount. VAT sits outside the CIS calculation entirely.

Example with VAT:

Labour:                      £1,000.00
Materials:                   £  200.00
Subtotal:                    £1,200.00
VAT (20%):                   £  240.00
Invoice total:               £1,440.00

CIS calculation:
Amount liable: £1,000 (labour only)
CIS deduction (20%):         £  200.00

You receive: £1,440 - £200 = £1,240
(£1,000 labour + £200 materials + £240 VAT - £200 CIS)

VAT is collected separately through your VAT return. CIS deductions only relate to Income Tax and National Insurance.

Storing Your Statements

You need CIS statements when filing Self Assessment. Missing statements means you can't prove what was deducted.

How to organise them:

• By tax year — Keep all statements from 6 April to 5 April together
• By contractor — If you work for multiple contractors, group within each tax year
• Digitally — Take photos or scan paper statements. Store in cloud backup

How long to keep them: HMRC can enquire into your tax return for up to 12 months after the filing deadline. Keep statements for at least 22 months after the end of the tax year — though 5 years is safer.

If you lose a statement, ask the contractor for a replacement. They're required to keep records. If the contractor has stopped trading, contact HMRC PT Operations with your details and they can confirm the deductions from their records.

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This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.

Official Sources

• Check your payments and deductions - GOV.UK
• Get paid under CIS - GOV.UK
• Construction Industry Scheme (CIS) - GOV.UK