Why is CIS taken off my pay?

Let's first make sure we know exactly what CIS is.

As a self-employed construction worker, you aren't paid a regular wage like most jobs outside of construction.

In other jobs, the necessary taxes are taken out automatically, and at the exact amount required. This is possible because income in most jobs is predictable – it doesn't involve accounting for expenses, and income from month to month is usually identical.

As a construction subcontractor, you're taxed on your profit for the year – which can't be predicted from any one invoice.

Your expenses also vary. Two different jobs can each pay you £1,000 but your expenses to complete one may be £100 and £300 on the other.

To navigate this, HMRC introduced the Construction Industry Scheme (CIS), where every self-employed subcontractor has a fixed percentage deducted from the labour part of all their invoices (20%, or 30% if they haven't registered for CIS).

Then, at the end of the tax year, if they've had too much deducted, they receive a refund – or if their deductions haven't covered the tax they're due to pay based on their profits, then they'll receive a tax bill to settle the difference.

Where the money goes

Essentially, the deductions on your invoices are advance payments towards your income tax and national insurance bill.

This money sits with HMRC until the tax year ends. They then calculate how much tax you owe for the year, take it out of the pot of money they collected from your deductions, and send the rest back to you, if there's any left.

If there isn't enough in the pot to begin with, you'll have a tax bill to pay.

This guide gives general information only. Tax rules change and every business is different, so speak to us before acting on it. Rules and figures checked in November 2026.