The CIS deduction rates are the three percentages a contractor applies to the labour element of a subcontractor's payment to calculate how much is withheld and paid to HMRC. For 2026/27 the rates are unchanged at 0%, 20% and 30%.
Which rate applies depends entirely on the subcontractor's registration status when the contractor verifies them through the HMRC CIS online service:
- 0% (Gross Payment Status). The subcontractor receives the full payment with nothing withheld. They must have passed all three GPS qualifying tests (business, turnover and compliance) and HMRC must have approved GPS. This is the best outcome for a subcontractor's cash flow.
- 20% (registered). The subcontractor is registered for CIS. The contractor deducts 20p for every £1 of labour and passes it to HMRC. The subcontractor receives 80% of their labour element plus 100% of any verified materials costs.
- 30% (unregistered). HMRC cannot find the subcontractor's UTR on the CIS register, or they have not registered. The contractor deducts 30p for every £1 of labour. The 10-point gap between the 20% and 30% rates is the primary financial reason for subcontractors to register.
A worked example on a £1,500 invoice (£1,000 labour, £500 materials):
- GPS: subcontractor receives £1,500 (no deduction).
- Registered: subcontractor receives £1,300 (£200 deducted on labour; £500 materials paid in full).
- Unregistered: subcontractor receives £1,200 (£300 deducted on labour; £500 materials paid in full).
All three deductions are advances against the subcontractor's eventual tax bill, not a final charge. See CIS deduction rates explained and use the CIS deduction calculator for your own invoice breakdown.