A payment and deduction statement is a document a contractor must issue to every subcontractor for each payment made under CIS. It is the subcontractor's official record of how much was paid, how much was deducted and on what basis, and it is essential for the subcontractor's tax return and any refund claim.
HMRC requires the statement to show:
- The contractor's name, UTR and, if applicable, employer reference.
- The subcontractor's name and UTR.
- The verification number used for that subcontractor.
- The tax month and tax year to which the payment relates.
- The gross amount of the payment (before deduction).
- The cost of materials included within the payment (the exempt element).
- The amount on which the deduction was calculated (labour element).
- The deduction rate applied (0%, 20% or 30%).
- The amount of deduction made.
- The net amount paid to the subcontractor.
Contractors must issue statements within 14 days of the end of the tax month in which the payment was made. Statements can be issued on paper or electronically (for example by email) provided the subcontractor agrees to electronic delivery.
Subcontractors should collect and retain every statement they receive throughout the year. When completing a Self Assessment return or applying for a CIS refund, the total deductions across all statements form the credit that is set against the tax bill. Missing statements can delay or reduce a refund. If a contractor refuses to issue a statement or issues one with incorrect figures, the subcontractor should report this to HMRC.
See CIS payment and deduction statements: what they must show for a detailed explanation including a specimen statement layout.