What is a CIS statement and what should it include?

A CIS statement, also known as a payment and deduction statement, is a document that contractors must give to subcontractors every time they make a payment under the Construction Industry Scheme. It provides a record of how much income you have earned, what deductions have been made, and the total tax paid to HMRC on your behalf.

CIS statements are essential for subcontractors because they act as proof of income and tax deductions. You will need them to complete your Self Assessment tax return and claim any refund that you are owed.

Why CIS statements are important

Under the Construction Industry Scheme, contractors deduct tax from payments made to subcontractors and send it directly to HMRC. This deduction is usually 20% for registered subcontractors or 30% for unregistered ones.

The CIS statement confirms these deductions, ensuring transparency between contractor, subcontractor, and HMRC. Without these statements, subcontractors may struggle to prove how much tax has already been paid, which can lead to delays in refunds or inaccurate tax calculations.

You must keep every CIS statement you receive for at least three years as HMRC may ask to see them if they review your tax records.

What a CIS statement should include

HMRC has specific requirements for what must appear on a CIS statement. Each monthly statement should clearly show the following details:

1. Contractor’s details

• Name of the contractor.

• Business address.

• Employer PAYE reference number.

2. Subcontractor’s details

• Name or trading name of the subcontractor.

• Unique Taxpayer Reference (UTR).

• Verification number (if applicable).

3. Payment details

• The gross amount paid before any deductions.

• The cost of any materials the subcontractor supplied.

• The amount of tax deducted under CIS.

• The net payment made to the subcontractor after deductions.

4. Tax month covered

• The statement must show the tax month for which the payment relates. HMRC’s tax months run from the 6th of one month to the 5th of the next.

5. Date of payment

• The actual date the payment was made to the subcontractor.

6. Declaration or company logo (optional)

• Many contractors include their logo or a short declaration confirming that the tax has been deducted in accordance with CIS rules.

Although the layout of CIS statements can vary between contractors, all of the above information must be present for the document to be valid.

How contractors issue CIS statements

Contractors must provide a CIS statement to each subcontractor within 14 days of the end of the tax month in which the payment was made. For example, if the payment was made in the tax month ending on 5 May, the statement must be issued by 19 May.

Statements can be provided in paper or digital form. Many contractors use accounting software such as Xero, QuickBooks, or Sage, which automatically generates and emails CIS statements to subcontractors.

If a contractor fails to issue a CIS statement, the subcontractor should request one as soon as possible. Contractors are legally required to provide it and could face penalties if they do not.

How subcontractors use CIS statements

Subcontractors use CIS statements for several important purposes:

• Filing tax returns: The total amount of CIS deductions shown on your statements is entered into your Self Assessment or company tax return. HMRC uses this information to calculate whether you owe additional tax or are due a refund.

• Claiming tax refunds: If you have overpaid tax, your CIS statements provide the evidence HMRC requires to process your refund quickly.

• Proving income: CIS statements can serve as proof of income for mortgage or loan applications.

• Maintaining business records: Keeping your statements organised helps you monitor earnings and stay compliant with HMRC rules.

Common mistakes to avoid

When working under CIS, both contractors and subcontractors can make errors that cause problems later. Common issues include:

• Missing or incomplete CIS statements.

• Incorrect deduction rates being applied.

• Payments not matching the amounts reported to HMRC.

• Statements showing the wrong UTR or verification number.

Checking your statements regularly and keeping digital copies prevents these issues and ensures your records remain accurate.

If you notice any errors, contact the contractor immediately and ask for a corrected statement.

Example in practice

A self employed joiner earns £3,000 from a contractor in April. The contractor deducts 20% tax (£600) and pays the remaining £2,400. By 19 May, the contractor sends a CIS statement showing:

• Gross payment: £3,000.

• Materials: £200.

• Tax deducted: £560 (20% of £2,800).

• Net payment: £2,440.

The joiner keeps this statement and uses it when filing their Self Assessment tax return to prove the £560 tax deduction.

How accountants help with CIS statements

Accountants play an important role in managing CIS statements for subcontractors. They can:

• Check that all statements are complete and accurate.

• Record and reconcile CIS deductions against HMRC records.

• Use the statements to prepare Self Assessment or company tax returns.

• Handle refund claims quickly and efficiently.

• Maintain organised digital records for compliance and audit purposes.

For contractors, accountants can also manage CIS submissions, issue compliant statements, and ensure HMRC deadlines are met each month.

Conclusion

A CIS statement is an essential document for anyone working under the Construction Industry Scheme. It records your earnings, materials, and tax deductions, providing proof of income and evidence for refund claims.

Each statement should include full details of both the contractor and subcontractor, payment amounts, deductions, and the relevant tax month. Keeping these statements safe and accurate ensures smooth tax reporting and faster refunds. With help from an accountant, you can make sure every CIS statement is correct and that your construction business remains fully compliant with HMRC.