CIS Deductions: The Monthly Returns Guide (2026)
How CIS deductions work in practice: the labour and materials split, the 20% and 30% rates, monthly returns, deduction statements, and reclaiming overpaid CIS.
CIS deductions are the slice of a subcontractor payment a contractor holds back and pays to HMRC, and the money only trips people up because of the arithmetic on a real invoice. The rate is 20% for registered subcontractors, 30% for unregistered ones, and 0% with gross payment status, and it applies to labour only, never to materials or VAT, so a £2,000 invoice with £1,500 labour deducts £300 and pays £1,700.
Contractors file a monthly return by the 19th, issue deduction statements, and face penalties for lateness, while subcontractors reclaim any overpaid CIS through Self Assessment or payroll. This guide walks through the calculation, the monthly return, statements and refunds, with KaamCam keeping the clean labour-and-materials invoice record underneath it all for $12 a month, about £9..