A sole trader in the CIS context is a self-employed individual who works in construction in their own name, without a limited company, and is paid by contractors who apply CIS deductions to the labour element of their invoices.
Sole traders are the largest group of CIS subcontractors (HMRC estimates 1.4 million or more registered CIS subcontractors in total, the majority of whom are unincorporated). They are the primary audience for most CIS content because the compliance burden and the refund opportunity are most acute for individuals trading in their own name.
Key features of the sole-trader CIS position in 2026/27:
- Deduction rate. Registered sole traders have 20% deducted from their labour income before payment; unregistered traders face 30%. Sole traders with GPS receive payment in full at 0%.
- Self Assessment. A sole trader must file a Self Assessment return each year. CIS deductions suffered are entered as a credit that reduces the income tax and Class 4 NIC bill. The personal allowance (£12,570 in 2026/27) and business expenses (tools, van, fuel, use-of-home) further reduce the taxable profit, which is why most sole traders end up with a refund.
- Class 4 NIC. Sole traders pay Class 4 NIC at 6% on profits between £12,570 and £50,270, and 2% above. This is included in the Self Assessment calculation.
- GPS turnover threshold. A sole trader needs net CIS turnover of at least £30,000 (excluding VAT and materials) in the last 12 months to qualify for GPS.
- Refund route. Refunds for sole traders come through Self Assessment, typically 5 to 10 working days after HMRC processes an online return.
- MTD ITSA. Sole traders with annual gross income above £50,000 must comply with Making Tax Digital for Income Tax from April 2026.
See CIS: sole trader or limited company, which structure works better? and our guide to CIS Self Assessment for subcontractors.