What is a CIS statement and what should it include?

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS deductions, refunds, verification, and monthly return responsibilities, without jargon. Our aim is to help you stay compliant with HMRC, avoid penalties, and keep your cash flow and records under control.

If you work under the Construction Industry Scheme, CIS statements are one of those documents that arrive regularly but are not always properly understood. From experience, many subcontractors file them away without really checking them, while others are unsure whether they even matter once the money has hit their bank account. In reality, a CIS statement is a key document, both for your own records and for staying compliant with HMRC.

In this article I want to explain what a CIS statement actually is, why it matters, who issues it, what information it must include, and how it is used when preparing tax returns or dealing with HMRC. I will also cover the most common issues I see with CIS statements and what you should do if something does not look right. Understanding this properly can save a lot of stress later on.

What a CIS statement actually is

A CIS statement is a written record provided by a contractor to a subcontractor, confirming the payments made for construction work and the CIS deductions taken from those payments. It is sometimes referred to as a CIS payment statement or CIS deduction statement, but the purpose is always the same.

The statement shows how much you were paid gross, how much was deducted under CIS, and how much you actually received. It is effectively your proof that tax has been deducted at source and paid over to HMRC on your behalf.

For subcontractors, this document is essential. It is the evidence you rely on to show HMRC that CIS deductions were taken, so they can be credited against your tax bill later. Without it, reclaiming or offsetting CIS can become difficult.

Who issues a CIS statement

CIS statements are issued by the contractor, not by HMRC.

If you are a subcontractor working for a contractor under CIS, it is the contractor’s legal responsibility to provide you with a CIS statement for each tax month in which they make a payment to you.

This applies whether you are a sole trader, partnership, or limited company. The obligation sits with the contractor making the payment.

From experience, some subcontractors assume HMRC issues CIS statements or that bank statements are enough. Neither is true. The contractor must issue the statement, and it must contain specific information.

When a CIS statement should be issued

A CIS statement should be issued after the end of each tax month in which a payment is made. The CIS tax month runs from the 6th of one month to the 5th of the next.

If you are paid multiple times in a tax month, the contractor can issue a single statement covering all payments in that month, rather than one per payment.

If no payment is made in a tax month, no statement is required for that period.

Why CIS statements are so important

CIS statements are not just administrative paperwork. They play a crucial role in your tax affairs.

They provide the evidence needed to:.

• Support your Self Assessment tax return if you are self employed

• Support PAYE offsets if you are a limited company

• Resolve disputes with HMRC about CIS deductions

• Reconcile your own records against contractor reports

HMRC relies heavily on CIS data reported by contractors, but errors do happen. When they do, CIS statements are often the quickest way to prove what was actually deducted.

From experience, subcontractors who keep accurate CIS statements find HMRC issues much easier to resolve than those who do not.

What a CIS statement should include

HMRC sets out clear requirements for what must be included on a CIS statement. If any of this information is missing, the statement may not be compliant.

A CIS statement should include:.

• The contractor’s name

• The contractor’s Unique Taxpayer Reference

• The subcontractor’s name

• The subcontractor’s Unique Taxpayer Reference or National Insurance number

• The tax month the statement relates to

• The date of payment

• The gross amount paid for labour

• The amount of CIS deducted

• The rate of deduction applied

• Confirmation that the deduction has been made under CIS

Some statements also include materials separately, which is helpful but not strictly required, as CIS applies only to the labour element.

The key figures are the gross labour amount and the CIS deducted, as these are what HMRC uses to reconcile your tax position.

CIS statements and materials

One area that often causes confusion is materials.

CIS deductions apply only to the labour element of a payment, not to materials. Good CIS statements clearly separate labour and materials, showing that deductions were applied correctly.

If a statement shows CIS deducted from the full invoice amount including materials, that may indicate an error. This is something you should raise with the contractor promptly, as incorrect deductions affect your cash flow and your tax records.

Electronic versus paper CIS statements

CIS statements can be issued in paper form or electronically. Many contractors now provide them by email or through online portals.

HMRC accepts electronic statements, provided they contain all the required information. You do not need a physical paper copy.

What matters is that you can access the statement and retain it for your records.

From experience, relying on portals without downloading copies can be risky if access is later removed, so I always recommend keeping your own copies.

How CIS statements are used in Self Assessment

If you are a sole trader or partnership, CIS statements feed directly into your Self Assessment tax return.

You declare your gross income from construction work, then enter the total CIS deducted for the tax year based on your CIS statements.

HMRC uses this figure to credit the deductions against your tax and National Insurance liability.

If the CIS figure entered does not match HMRC’s records, your return may be delayed or queried. Having CIS statements to hand makes resolving this much easier.

How CIS statements are used by limited companies

For limited companies, CIS statements are still important, but they are used differently.

CIS deductions suffered by a company are offset against PAYE liabilities, not reclaimed through the corporation tax return. The figures from CIS statements are used when completing the Employer Payment Summary.

If the figures are wrong or incomplete, the company may fail to offset deductions correctly, leading to higher PAYE payments than necessary.

Again, accurate statements are the foundation of getting this right.

Checking your CIS statements properly

One of the biggest mistakes I see is subcontractors not checking their CIS statements.

You should always check that:.

• Your name and UTR are correct

• The tax month is correct

• The gross labour amount matches your invoice

• Materials have not been included in the deduction

• The deduction rate is correct, usually 20 percent if registered

If anything looks wrong, it should be queried immediately. Leaving errors unchallenged can create problems months or even years later.

What if you do not receive a CIS statement

If a contractor does not provide a CIS statement, that is a problem, but it is one that can usually be resolved.

The first step is to request the statement directly from the contractor. In most cases, it is an oversight rather than refusal.

If a contractor persistently fails to provide statements, HMRC can take action, as issuing CIS statements is a legal requirement.

From experience, contractors respond quickly once they understand that the statement is needed for tax compliance.

CIS statements and HMRC discrepancies

Sometimes HMRC’s CIS records do not match your statements. This can happen if a contractor submits incorrect returns or submits them late.

In these situations, CIS statements are your primary evidence. HMRC may ask you to provide copies to support your figures.

Keeping statements organised by tax year makes this process far easier and reduces delays.

How long you should keep CIS statements

HMRC requires business records to be kept for several years.

As a general rule, CIS statements should be kept for at least five years after the 31 January submission deadline for the relevant tax year.

For limited companies, retention periods can be longer, so keeping CIS statements alongside your accounting records is sensible.

From experience, having older statements available can be invaluable if HMRC raises queries long after the work was done.

Common problems I see with CIS statements

There are a few recurring issues that cause trouble.

One is missing statements, particularly where subcontractors move between contractors frequently.

Another is statements with incorrect UTRs or names, which can prevent deductions being matched to the correct taxpayer.

I also see cases where statements show deductions at 30 percent because the subcontractor was not properly verified, even though they were registered. These situations should always be addressed quickly.

CIS statements and cash flow understanding

Beyond compliance, CIS statements help you understand your cash flow and true earnings.

They show clearly how much has been deducted and how much you are effectively paying in advance towards your tax bill. This awareness supports better budgeting and planning, particularly if deductions are high.

Subcontractors who regularly review their statements tend to be more prepared for tax time and less surprised by the numbers.

Digital records and organisation

In a digital world, organising CIS statements does not need to be complicated.

Keeping them in folders by tax year, with clear file names, is usually sufficient. Some people also keep a simple spreadsheet summarising gross income and CIS deducted per contractor.

This kind of organisation pays off when preparing tax returns or responding to HMRC queries.

When professional help is useful

While CIS statements themselves are straightforward, they often sit within a wider set of issues, such as discrepancies, missing deductions, or confusion about offsets.

In these cases, having an accountant review your statements and reconcile them against HMRC records can save time and reduce stress.

From experience, problems are much easier to fix early than after a tax return has been submitted.

Final thoughts

A CIS statement is more than just a receipt. It is a crucial tax document that proves how much income you earned and how much tax was deducted under the Construction Industry Scheme.

Understanding what it should include, checking it carefully, and keeping it safe are all part of staying compliant and protecting yourself from unnecessary problems.

In my experience, subcontractors who treat CIS statements as important records rather than background paperwork feel far more in control of their tax position. When statements are accurate and well organised, CIS becomes a system you can work with confidently, rather than something that causes confusion or frustration.

You may also find our guidance on what is a cis return and check cis payments online helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.