Why CIS subcontractors face a specific mortgage problem
Getting a mortgage as a CIS subcontractor is achievable, but it is rarely straightforward. The issue is not your income, it is how lenders read it. A salaried employee hands over a few months of payslips and a P60. A CIS subcontractor does not have payslips in that sense, receives payments with a deduction already taken at source, and often gets a meaningful chunk of money back as a tax refund at the end of the year. None of that fits neatly into the income-assessment box most high-street lenders have built.
The result is that some lenders undercount your earnings, some are comfortable with CIS income, and a few specialists assess it on terms that are more favourable than the mainstream. Knowing which category you are dealing with, and presenting your income in the right format, is most of the battle.
How mainstream lenders assess CIS income
The starting point for most mainstream lenders is your Self Assessment tax return. They are looking for a consistent, verifiable income figure, and the SA return is the closest equivalent to a payslip for a self-employed person in construction. Specifically, they tend to use the net profit figure: your gross CIS receipts for the year minus the allowable business expenses you have claimed.
That creates a problem that is specific to CIS. The 20% deduction your contractor takes at source is not an expense. It is a tax advance paid to HMRC on your behalf. One point worth understanding before you read the figures below: the deduction applies to the labour element of your invoices only. The cost of materials you buy for a job is excluded from the deduction base, so the 20% bites on the labour you supply, not on the full invoice value. So your gross CIS receipts land in the income section of the return, your legitimate business costs come off, and the resulting profit is what the lender bases affordability on. Because the 20% was already taken from the payments you received during the year, there is a gap between the gross figure on your deduction statements and the net cash you actually banked, and lenders focused on the SA profit figure are working from something smaller than your headline earnings.
For a registered subcontractor on the standard 20% rate, the practical effect is significant. A subcontractor whose gross CIS income is £60,000 receives £48,000 net across the year. If their allowable expenses reduce the SA profit further, say to £42,000, that is the figure a mainstream lender is likely to apply their income multiple to. The gross figure that reflects the full value of their work, £60,000, does not feature.
How specialist CIS lenders assess income differently
A smaller number of lenders, often described as CIS-friendly or specialist construction lenders, take a different approach. Rather than anchoring to SA profit, they are willing to assess affordability on the gross CIS income shown on your contractor deduction statements, the full figure before the 20% advance deduction is taken.
The rationale is that the 20% is not a cost of earning the income. It is a timing mechanism. The money will come back as a refund if you have overpaid, or will offset tax owed if you have not. Assessed on the gross figure, the same subcontractor earning £60,000 gross is treated as earning £60,000, not £48,000 net or £42,000 after expenses.
The table below shows what that difference means at three income levels, assuming a 20% deduction rate applied to the labour element and modest business expenses. The gross CIS income column is the labour value of the work, since materials are excluded from the deduction in the first place:
| Gross CIS income | Net received (after 20% deduction) | SA profit after expenses (illustrative) | Mainstream lender uses | Specialist lender uses |
|---|---|---|---|---|
| £40,000 | £32,000 | £28,000 | £28,000 | £40,000 |
| £60,000 | £48,000 | £42,000 | £42,000 | £60,000 |
| £80,000 | £64,000 | £55,000 | £55,000 | £80,000 |
At a standard 4.5x income multiple, the subcontractor earning £60,000 gross can borrow £189,000 via the mainstream route or £270,000 via the specialist route. That is an £81,000 gap on the same income, driven entirely by which figure the lender chooses to use. The figures in the table are illustrative, but the direction is consistent across all income levels.
It is worth noting that specialist lenders are not uniformly better in every dimension. They may charge higher rates, require larger deposits, or have narrower product ranges. The right approach depends on your full picture, which is why professional mortgage advice from someone familiar with CIS income is worth the time.
Documents lenders typically require
Whether you are applying with a mainstream or specialist lender, the documentary requirements follow a similar pattern. Having these ready before you apply reduces delays and avoids the frustrating back-and-forth that slows down CIS mortgage applications.
- SA302s for the last two tax years. The SA302 is the HMRC tax calculation document produced after you file your Self Assessment return. It shows your total income, the tax due and any reliefs applied. You can download it directly from your HMRC online account once the return is processed.
- Tax year overviews for the same two years. This is a separate HMRC document that confirms your return has been filed and that your tax liability is paid or in a payment arrangement. Most lenders want both the SA302 and the overview together.
- CIS payment and deduction statements. These are the monthly statements your contractor provides showing gross payments and the CIS deductions taken. They are the primary source for the gross CIS income figure that a specialist lender will use.
- Three to six months of personal bank statements. To confirm income landing in your account and to check that your declared income is consistent with what is actually being received.
The SA deadline for online Self Assessment returns is 31 January following the end of the tax year. Your SA302 cannot be issued until your return is filed and processed, so a late return can hold up a mortgage application. If you are planning to apply for a mortgage, filing on time is not optional admin, it is a practical prerequisite.
How to get your SA302 from HMRC
Lenders sometimes catch CIS subcontractors out by asking for documents they have never had to produce before. The SA302 is the most common one. To get yours, log in to your HMRC online account at gov.uk and navigate to your Self Assessment returns. Once a return is filed and processed, the corresponding SA302 is available to download as a PDF. Most lenders accept a printed or digital copy from the HMRC portal.
If you use an accountant or tax agent to file your return, they can provide the SA302 directly. Some lenders will also accept a letter from a qualified accountant confirming your earnings as a supplement, though this does not replace the SA302 itself.
One important detail: you need the SA302 and the tax year overview. The SA302 shows what was declared; the overview confirms it was filed and the associated tax addressed. Sending only one of the two is a frequent source of unnecessary delay.
Why your CIS refund does not count as income
A CIS refund is a repayment of tax that was deducted at source above what you actually owed after your expenses and personal allowance were accounted for. It is not additional income, and lenders do not treat it as income for affordability purposes.
What matters for the mortgage is the profit on the SA return: your gross CIS receipts for the year, minus your allowable business expenses, resulting in the net profit figure. The refund simply returns overpaid tax. It does not change the income figure a lender is assessing.
This is a source of genuine confusion for CIS subcontractors, particularly those who receive a meaningful refund each year and assume it reflects positively on affordability. The refund is a consequence of how CIS deductions work, not a measure of income. For the mechanics of how the refund is calculated and claimed, our guide to claiming a CIS tax refund covers the process in full.
Specialist CIS mortgage brokers and lenders
The mortgage market for CIS subcontractors is not uniform. The lenders willing to assess gross CIS income, the products available to sole traders versus limited-company directors, and the approach to variable or seasonal construction income all differ across the market. A broker with specific experience of CIS applications will have a working knowledge of which lenders are suitable for which situations and how to present your application in the strongest light.
We do not recommend or endorse specific brokers or lenders here. What we would say is that using a specialist rather than walking into a high street branch with no preparation is likely to broaden your options and reduce the risk of a declined application leaving a mark on your credit file. Mortgage advice is a regulated activity and the right broker will understand CIS income, SA302s and deduction statements without needing everything explained.
Strengthening your application before you apply
The best mortgage application is built over the two years before you submit it, not in the week before. The steps below are within your control and make a material difference to the options available to you.
- File your Self Assessment returns on time, every year. The online deadline is 31 January. Two consecutive on-time returns with processed SA302s gives lenders the two-year income history they are looking for. A gap or a late filing breaks the sequence and narrows your lender pool.
- Register for CIS if you have not already done so. An unregistered subcontractor suffers the 30% deduction rate rather than the 20% registered rate. Beyond the cash-flow cost, unregistered status can raise questions about the orderliness of your tax affairs. Our guide to CIS sole trader versus limited company covers how your trading structure interacts with tax and registration.
- Claim your legitimate expenses properly. Legitimate business expenses reduce your tax bill. For most CIS subcontractors this includes tools and equipment, work clothing, mileage at the HMRC approved rate (55p per mile for the first 10,000 business miles from 6 April 2026), and costs directly related to the job. Claiming these properly means your SA profit is accurate, and an accurate profit figure is the foundation of a credible mortgage application.
- Keep your CIS deduction statements. Your contractor should provide a payment and deduction statement for each payment made. Collect and keep these, because they are the primary evidence for your gross CIS income and specialist lenders will want to see them.
- Work with a CIS accountant before applying. A clean, well-prepared Self Assessment return, filed on time, with accurate income and properly documented expenses, is the single most useful thing you can do for a mortgage application. The return is the bedrock. Everything else, the bank statements, the deduction certificates, the broker relationship, is built on top of it.
If you are a limited-company director in construction, the picture is slightly different. Your income is typically a combination of salary and dividends, and lenders will assess those components separately. The structure of your company accounts and how you extract profit both feed into affordability in ways that are worth reviewing with your accountant before you approach a lender. We cover the structure decision in detail in our guide to operating as a sole trader or limited company under CIS.
The bottom line
CIS subcontractors can get mortgages. The challenge is that most of the mainstream mortgage infrastructure was built around payslips and P60s, and CIS income does not arrive in that format. The 20% deduction taken at source creates a gap between gross earnings and net receipts that mainstream lenders tend to measure against the wrong end of, and the annual refund, while real and often meaningful, does not register as income for affordability purposes.
The levers you have are your Self Assessment record, the completeness and accuracy of your deduction statements, and the choice of lender and broker. Two years of on-time SA302s, proper expense claims, and a broker who understands CIS income puts you in a materially stronger position than walking in cold.
If your tax returns are not yet in good order, or you are not confident that your SA profit accurately reflects your earnings after legitimate expenses, that is the place to start. A well-prepared return is the foundation. You can find out more about what we do on our services page, or if you think you may have overpaid CIS tax and are owed a refund, our CIS refund service is the first step.