Does my CIS limited company need to file Self Assessment?

The company files a Corporation Tax return (CT600), not a Self Assessment return. You as a director may still need to file a personal Self Assessment return if you draw dividends, receive director's salary above the personal allowance, or have other income. The company's CIS recovery happens on the payroll side through the EPS, not through anyone's Self Assessment.

How do I reclaim CIS via the EPS as a limited company?

Each month you file an Employer Payment Summary through your payroll software, reporting the CIS deducted from your company's income in that tax month. HMRC reduces the PAYE and NIC your company owes by the same amount. If the CIS deducted exceeds the PAYE due, the surplus carries forward to the following month. Any remaining credit at the year end is set against Corporation Tax or refunded, with a 25-working-day HMRC repayment target.

Can my limited company hold Gross Payment Status?

Yes. A limited company can hold GPS if it passes the three qualifying tests: the business test (UK construction work, bank account), the turnover test (£30,000 net CIS turnover per director or £100,000 total), and the compliance test (all tax obligations met on time for the past 12 months). From April 2026, keeping GPS also depends on satisfying the ongoing anti-fraud due-diligence duty.

What is the GPS turnover test for a limited company?

The turnover test for a limited company requires net annual CIS turnover of at least £30,000 per director or £100,000 in total across the company. 'Net' means excluding VAT and the direct cost of materials, consistent with the labour-only deduction base. A company with two directors each generating £35,000 of net CIS turnover passes the per-director test on £35,000 each, even if the total is below £100,000.

What happens to CIS deductions at year end if EPS credits are not fully used?

Surplus CIS credits unabsorbed by the monthly EPS offsets become a year-end excess. The excess is set against the Corporation Tax liability for the same accounting period first. If the CT liability is smaller than the credit, HMRC refunds the balance as a cash payment. HMRC's target is 25 working days from the final EPS submission for processing EPS repayments.

How much Corporation Tax does a CIS limited company pay in 2026/27?

The main rate is 25% on profits over £250,000. The small profits rate is 19% on profits under £50,000. Between £50,000 and £250,000, marginal relief applies, producing an effective rate that increases incrementally from 19% to 25%. For most single-director construction companies, profits fall below £50,000 after director's salary, and the 19% rate applies.

What are the dividend tax rates for a CIS limited company director in 2026/27?

Dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band for 2026/27, after the £500 dividend allowance. These rates apply to all dividend income in excess of the allowance, regardless of whether the dividends come from CIS profit or any other source.

Is a limited company subject to MTD for Income Tax?

No. MTD for Income Tax applies to sole traders and partnerships, not to limited companies. A director who also trades personally as a sole trader would be subject to MTD ITSA above the relevant income threshold (£50,000 from April 2026, £30,000 from April 2027), but the limited company's income is reported through Corporation Tax returns, which are a separate system.

Should I incorporate my CIS business to benefit from the EPS?

The EPS cash-flow benefit is real and often decisive for subcontractors with heavy CIS deductions. On £80,000 of gross labour income deducted at 20%, the company recovers £1,333 per month rather than waiting up to 18 months. Against this, incorporation adds employer NIC at 15% on salary above £5,000 a year, additional company filing costs, and from April 2026 more director-level compliance obligations. The net benefit depends on your profit level and how much you need to draw out each month.

CIS for Limited Company Directors 2026

Trade Tax Specialists Editorial Team

Figures checked against primary sources (HMRC, legislation.gov.uk, HMRC CIS guidance) in 12 June 2026.

Key takeaways

A CIS limited company recovers deductions in real time via the Employer Payment Summary (EPS) each month, offsetting CIS suffered against PAYE due, rather than waiting until the Self Assessment year-end as a sole trader must.
GPS turnover tests for a limited company are measured per director (£30,000 net) or total (£100,000 net). A company with two or three working directors can reach the threshold through the per-director route when a sole trader cannot.
Dividends are taxed at 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate) from 6 April 2026. Corporation Tax rates are 19% on profits under £50,000 and 25% on profits over £250,000 with marginal relief between.
From 6 April 2026, directors of companies that pay CIS subcontractors must carry out three due-diligence steps before each payment. Where the company's deliberate behaviour produces penalties under FA 2004 ss.62A/62B, officers can face personal liability under general officer-liability rules.
Making Tax Digital for Income Tax applies to sole traders and partnerships, not to limited companies. Incorporating removes the MTD ITSA quarterly-update obligation, replacing it with Corporation Tax filing.

Why CIS is genuinely different for limited companies

The Construction Industry Scheme applies to your company in the same way it applies to a sole trader: deductions are taken from the labour element of payments at 0%, 20% or 30%, depending on your GPS status and registration. But from that common starting point, the operating mechanics diverge significantly.

A sole trader recovers over-deducted CIS through a Self Assessment return filed after 31 January following the tax year end. Deductions suffered in April 2026 cannot be reclaimed until February 2027 at the earliest, a gap of up to 18 months during which that money sits with HMRC. A limited company does not wait. It runs a PAYE scheme, and the CIS rules allow it to offset CIS deductions suffered against its monthly PAYE and NIC remittance through the Employer Payment Summary (EPS). Recovery is monthly, not annual.

That single difference is why incorporation appeals to subcontractors with high CIS deduction volumes. On £7,000 of CIS deductions a month, the company recovers roughly £7,000 against its PAYE bill each month. The sole trader with the same income waits a year and a half for the same money.

Beyond timing, the tax calculation is different (Corporation Tax rather than income tax and Class 4 NIC), profit extraction uses dividends taxed at the 2026/27 rates, GPS eligibility is measured per director rather than per individual, and from April 2026 directors carry anti-fraud compliance obligations that do not apply to sole traders.

Registering a limited company for CIS

A limited company registers for CIS using the company UTR and its Companies House registration number. The registration is in the company's name, not the director's personal name. Once registered, the company is the CIS entity: it holds the deduction rate (20% registered, or 0% if GPS is granted), it is verified by contractors before payment, and it files Corporation Tax and EPS returns.

The company must also run a PAYE scheme. Even a single-director company typically pays a small salary to use the National Insurance secondary threshold (£5,000 from April 2025, carried into 2026/27), and the PAYE scheme is the mechanism through which the EPS CIS offset works. Without a PAYE scheme there is no EPS, and without an EPS there is no in-year CIS recovery.

If the company also pays its own subcontractors, it must register as a CIS contractor as well as a CIS subcontractor. Both positions are held simultaneously. As a subcontractor the company receives CIS income with deductions taken from it. As a contractor it deducts from the subcontractors it pays and files CIS300 monthly returns.

EPS reclaim: how the monthly offset works

The Employer Payment Summary is a monthly payroll submission within HMRC's Real Time Information (RTI) system. It sits alongside the Full Payment Submission (FPS), which reports the actual payroll. The EPS's CIS role is to report the amount of CIS that has been deducted from the company's income in the tax month, so that HMRC reduces the PAYE and NIC the company would otherwise remit by the same amount.

The EPS must be filed by midnight on the 19th of the month following the end of the tax month in which the CIS deductions were suffered. Tax months run to the 5th. Deductions suffered in the period 6 June to 5 July must be reported on an EPS filed by 19 July. The reduced PAYE payment is then due by the 22nd (electronic).

The figure that goes in the CIS suffered field on the EPS is the total CIS deductions actually withheld in that tax month, taken directly from the CIS payment and deduction statements your contractors provided. This is the tax amount withheld, not the gross invoice value and not the full labour element. Entering the gross income figure is the most common EPS error and produces a mismatch with the contractor's CIS300 return.

Worked EPS example: month-by-month offset

A single-director construction limited company. The company carries out drainage work. Gross CIS income is £10,000 a month (all labour), deducted at 20%, so £2,000 CIS withheld each month. The company pays the director a salary of £12,570 a year (the personal allowance), which produces a monthly PAYE/NIC liability.

Month	CIS deducted from company (£)	PAYE/NIC due before offset (£)	Net payable to HMRC after EPS (£)	Surplus carried forward (£)
April 2026	2,000	1,200	0 (£800 surplus)	800
May 2026	2,000	1,200	0 (£800 surplus)	1,600
June 2026	2,000	1,200	0 (£800 surplus)	2,400

By the end of June the company has accumulated £2,400 of unused CIS credit. This carries forward automatically on each subsequent EPS. By the end of the tax year, if the accumulated credit exceeds the total PAYE liability for the year, HMRC applies the excess to the Corporation Tax account or issues a cash refund, with a 25-working-day repayment target from the point the final EPS is submitted and processed.

The sole-trader equivalent on the same income waits until February 2027 at the earliest to receive the first instalment of that recovery. The company's EPS route converts this into a rolling monthly benefit.

Corporation Tax: how CIS deductions reduce the CT bill

CIS deductions suffered by a limited company are treated as advance payments of Corporation Tax. They are not income tax credits (as they are for a sole trader) and they do not go on the director's personal Self Assessment return.

During the year, the EPS mechanism draws on the CT credit early, setting it against PAYE bills. At year end, any remaining credit is applied to the CT liability for the same accounting period. If the CT liability is smaller than the accumulated credit, HMRC refunds the balance.

Corporation Tax rates for 2026/27:

Profit level	Corporation Tax rate
Under £50,000	19% (small profits rate)
£50,000 to £250,000	Marginal relief (effective rate between 19% and 25%)
Over £250,000	25% (main rate)

For most single-director construction companies, profits after paying a director's salary and employer NIC sit below £50,000, and the 19% rate applies. A company with one director earning £50,000 of net profit before salary pays roughly £7,700 of employer NIC (15% on salary above £5,000, assuming a salary of around £12,570), leaving taxable company profit, on which 19% Corporation Tax applies.

GPS for limited companies: the per-director test

Gross Payment Status lets a subcontractor receive payments at 0% rather than 20%. For a limited company, the turnover test is measured per director or in total:

Entity type	GPS turnover test
Sole trader	£30,000 net CIS turnover per year
Limited company	£30,000 net per director OR £100,000 total
Closely controlled company (5 or fewer controllers)	£30,000 per controller

"Net" means excluding VAT and the cost of materials, consistent with the §1 labour-only deduction base. A subcontractor with £120,000 of gross invoices including £30,000 of materials and £10,000 of VAT has net CIS turnover of £80,000.

The per-director route is often decisive. A two-director company each generating £35,000 of net CIS turnover passes the per-director test, even though neither individually would reach £100,000. A sole trader generating the same combined £70,000 of net CIS turnover passes the £30,000 single-person test with room to spare. The GPS pathway does not inherently favour the company over the sole trader at low turnover levels, but at higher turnover the company's per-director structure can be advantageous for multi-director firms.

All three GPS tests (business, turnover and compliance) must be passed. The compliance test requires all tax obligations to have been met on time for the past 12 months: no late Self Assessment returns, no overdue CT payments, no PAYE defaults. A company with an outstanding PAYE liability or a late CT600 will fail the compliance test.

Our guide to Gross Payment Status covers the qualifying process, the compliance test and the April 2026 changes in full.

April 2026 GPS anti-fraud obligations for directors

Finance Act 2026 (c. 11, Royal Assent 18 March 2026) introduces tougher GPS rules in force from 6 April 2026. These affect limited company directors in two ways: as subcontractors whose GPS could be revoked, and as directors of companies that pay CIS subcontractors.

Immediate revocation. HMRC can revoke GPS without advance notice where a contractor "knew or should have known" about fraudulent supply-chain connections. A five-year ban on GPS reapplication follows revocation on fraud grounds. For a company earning £500,000 a year in GPS-covered labour payments, the cash-flow cost of losing GPS is roughly £100,000 a year in additional upfront deductions.

Knowledge-based penalty under FA 2004 ss.62A/62B. A person who makes a payment knowing, or with reason to know, that a connected party has deliberately failed to comply with CIS is liable to a penalty of 20% of the payment (s.62A). Where a company's deliberate behaviour produces these penalties, HMRC can pursue the company's officers personally under the existing officer-liability rules. No fixed percentage attaches to director exposure under the officer-liability route.

Three-step due diligence. To meet the "should have known" standard, the company must, before each payment to a subcontractor: re-verify the subcontractor's CIS status with HMRC, run a Companies House legitimacy check, and verify that the bank account name matches the registered business. Directors who oversee the payment process carry practical responsibility for ensuring these steps are completed and documented.

Dividend extraction: the 2026/27 rates

After paying Corporation Tax, the remaining profit in the company can be extracted as dividends. Dividends are taxed at:

Rate band	Dividend tax rate from 6 April 2026
Up to basic rate (income up to £50,270)	10.75%
Higher rate (£50,271 to £125,140)	35.75%
Additional rate (over £125,140)	39.35%

The first £500 of dividend income is covered by the dividend allowance and taxed at 0%. Above that, the rate depends on which band the dividend occupies once added to your other income for the year.

Worked extraction example: single director, 2026/27

Director takes a salary of £12,570 (the personal allowance) and extracts £37,700 of dividends from company profit. The salary uses up the personal allowance and the basic-rate band absorbs the dividends.

Item	Amount (£)
Director's salary	12,570
Less: personal allowance	(12,570)
Taxable salary income	0
Dividends received	37,700
Less: dividend allowance	(500)
Taxable dividends (all in basic rate band)	37,200
Dividend tax at 10.75%	3,999
Employer NIC on salary above £5,000 (15% x £7,570)	1,136

The company pays Corporation Tax on its profits at 19% (assuming small profits rate applies). The director then pays personal dividend tax on the extraction. The total combined tax burden, company and personal, determines whether the limited company structure is more or less efficient than a sole trader at that profit level.

For a detailed comparison of structures with real 2026/27 numbers, see our guide to CIS: sole trader or limited company, which works better?

EPS reclaim vs Self Assessment: the practical gap

The contrast between the limited company EPS route and the sole-trader Self Assessment route is significant enough to be the deciding factor for some subcontractors:

Feature	Limited company (EPS)	Sole trader (Self Assessment)
When CIS is recovered	Monthly, in the same tax month it was deducted	After 31 January following the tax year end (up to 18 months)
Route	Employer Payment Summary filed by the 19th	Self Assessment return filed by 31 January
HMRC repayment target	25 working days for EPS excess refund	5-10 working days once SA return processed
CIS treated as	Advance payment of Corporation Tax	Advance payment of income tax and Class 4 NIC

The EPS mechanics and a month-by-month walkthrough of what happens when surplus accumulates are covered in our guide to CIS for limited companies: how the EPS reclaim works.

VAT and limited companies with CIS income

A limited company subcontractor that is VAT-registered and working for VAT-registered contractors may be subject to the VAT domestic reverse charge (DRC). Under DRC, which has applied since 1 March 2021, the contractor (customer) accounts for the VAT rather than the supplier charging it. The DRC applies when all five conditions are met: both parties VAT-registered, both CIS-registered, the supply is a specified CIS service, the customer is not the end user, and the supply is standard- or reduced-rated (not zero-rated).

For a limited company subcontractor on the flat-rate VAT scheme, DRC is significant: if most of your sales are subject to DRC, you no longer collect VAT from your customers, which undermines the benefit of the flat-rate scheme. Most VAT-registered subcontractors in this position should exit the flat-rate scheme. The broader DRC position is covered in our guide to the VAT reverse charge for construction services.

Calculator tools for limited company CIS directors

Two calculators are useful for limited company directors working through the numbers:

CIS take-home calculator: works out your net income after Corporation Tax and dividend extraction at 2026/27 rates, letting you compare sole-trader and limited-company scenarios on your actual figures.
GPS eligibility checker: checks whether your company's CIS turnover and compliance record meet the GPS qualifying tests on the per-director and total-turnover basis.

Making Tax Digital: what limited companies are and are not subject to

MTD for Income Tax applies to sole traders and partnerships with gross income over £50,000 from April 2026, dropping to £30,000 from April 2027. It does not apply to limited companies. A construction company director does not need to file quarterly MTD ITSA updates in respect of the company's CIS income.

The company files a Corporation Tax return (CT600) annually, which is a separate system. The director may still file a personal Self Assessment return if they have dividend income or other personal income sources that require reporting, but the quarterly MTD update obligation does not apply to that return if the director's total qualifying income (sole-trader income, if any) is below the threshold.

For sole traders considering incorporation partly to escape MTD quarterly reporting: the timing matters. The MTD threshold is tested on gross income before expenses and before CIS deductions. A subcontractor on £60,000 gross who receives £48,000 after 20% CIS deductions is tested on the £60,000 figure and is within the April 2026 MTD scope. For subcontractors already hitting that threshold, the timing of incorporation relative to the first MTD period is worth planning carefully.

Our companion guide to CIS limited company EPS reclaim mechanics covers the monthly filing steps and the interaction with CT at year end in granular detail. Our CIS limited company reclaim guide covers the year-end process when surplus EPS credits need to be converted to a CT offset or cash refund.

Frequently asked questions

Does my CIS limited company need to file Self Assessment?: The company files a Corporation Tax return (CT600), not a Self Assessment return. You as a director may still need to file a personal Self Assessment return if you draw dividends, receive director's salary above the personal allowance, or have other income. The company's CIS recovery happens on the payroll side through the EPS, not through anyone's Self Assessment.
How do I reclaim CIS via the EPS as a limited company?: Each month you file an Employer Payment Summary through your payroll software, reporting the CIS deducted from your company's income in that tax month. HMRC reduces the PAYE and NIC your company owes by the same amount. If the CIS deducted exceeds the PAYE due, the surplus carries forward to the following month. Any remaining credit at the year end is set against Corporation Tax or refunded, with a 25-working-day HMRC repayment target.
Can my limited company hold Gross Payment Status?: Yes. A limited company can hold GPS if it passes the three qualifying tests: the business test (UK construction work, bank account), the turnover test (£30,000 net CIS turnover per director or £100,000 total), and the compliance test (all tax obligations met on time for the past 12 months). From April 2026, keeping GPS also depends on satisfying the ongoing anti-fraud due-diligence duty.
What is the GPS turnover test for a limited company?: The turnover test for a limited company requires net annual CIS turnover of at least £30,000 per director or £100,000 in total across the company. 'Net' means excluding VAT and the direct cost of materials, consistent with the labour-only deduction base. A company with two directors each generating £35,000 of net CIS turnover passes the per-director test on £35,000 each, even if the total is below £100,000.
What happens to CIS deductions at year end if EPS credits are not fully used?: Surplus CIS credits unabsorbed by the monthly EPS offsets become a year-end excess. The excess is set against the Corporation Tax liability for the same accounting period first. If the CT liability is smaller than the credit, HMRC refunds the balance as a cash payment. HMRC's target is 25 working days from the final EPS submission for processing EPS repayments.
How much Corporation Tax does a CIS limited company pay in 2026/27?: The main rate is 25% on profits over £250,000. The small profits rate is 19% on profits under £50,000. Between £50,000 and £250,000, marginal relief applies, producing an effective rate that increases incrementally from 19% to 25%. For most single-director construction companies, profits fall below £50,000 after director's salary, and the 19% rate applies.
What are the April 2026 director obligations under the GPS anti-fraud rules?: Finance Act 2026 (enacted 18 March 2026) inserts FA 2004 ss.62A/62B, which impose a 20% penalty on any payment made in the knowledge, or with reason to know, of a deliberate CIS compliance failure in the supply chain. Where a company's deliberate behaviour produces these penalties, HMRC can pursue the company's officers personally under the existing officer-liability rules. Directors must ensure the company carries out the three due-diligence steps before each subcontractor payment: re-verify CIS status, Companies House check, bank account name verification.
What are the dividend tax rates for a CIS limited company director in 2026/27?: Dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band for 2026/27, after the £500 dividend allowance. These rates apply to all dividend income in excess of the allowance, regardless of whether the dividends come from CIS profit or any other source.
Is a limited company subject to MTD for Income Tax?: No. MTD for Income Tax applies to sole traders and partnerships, not to limited companies. A director who also trades personally as a sole trader would be subject to MTD ITSA above the relevant income threshold (£50,000 from April 2026, £30,000 from April 2027), but the limited company's income is reported through Corporation Tax returns, which are a separate system.
Should I incorporate my CIS business to benefit from the EPS?: The EPS cash-flow benefit is real and often decisive for subcontractors with heavy CIS deductions. On £80,000 of gross labour income deducted at 20%, the company recovers £1,333 per month rather than waiting up to 18 months. Against this, incorporation adds employer NIC at 15% on salary above £5,000 a year, additional company filing costs, and from April 2026 more director-level compliance obligations. The net benefit depends on your profit level and how much you need to draw out each month.

Most CIS subcontractors are owed money back.

The average CIS subcontractor overpays around £2,000 a year in tax deductions. Book a free call with a specialist CIS accountant. We will review your deductions, identify what you are owed, and handle the reclaim. Plain English, no jargon.

CIS for Limited Companies: How the EPS Reclaim Works and Why Timing Matters
A limited company that suffers CIS deductions does not have to wait for year end to get that money back. The Employer Payment Summary lets it offset deductions against its PAYE bill every month, creating a real-time recovery cycle rather than a wait that can stretch to almost two years on the sole-trader route. This guide covers the practical steps, a month-by-month worked example, what happens when deductions exceed PAYE, the Corporation Tax treatment, and a clear comparison with the sole-trader Self Assessment route.