Construction Industry Scheme (CIS) & Corporation Tax: CT600 Guide
If your limited company works in construction, the Construction Industry Scheme (CIS) directly affects how you file your CT600.
What is CIS?
CIS requires contractors to deduct money from payments to subcontractors and pass it to HMRC — like PAYE but for construction.
Deduction Rates
| Status | Rate |
|---|---|
| Registered subcontractor (verified) | 20% |
| Unregistered subcontractor | 30% |
| Gross payment status | 0% |
CIS and Your CT600
As a Subcontractor
CIS deductions are essentially Corporation Tax paid in advance. On your CT600:
- Calculate Corporation Tax as normal
- Deduct CIS suffered from your liability
- If CIS exceeds CT, claim a refund
Example
| Item | Amount |
|---|---|
| Subcontracting income | £200,000 |
| CIS deducted (20%) | £40,000 |
| Taxable profits | £150,000 |
| Corporation Tax at 25% | £37,500 |
| CIS already paid | (£40,000) |
| HMRC refund | £2,500 |
This is common — CIS deductions often exceed the CT due.
Gross Payment Status
To avoid deductions entirely, apply for gross payment status. Requirements:
- CIS registered
- Turnover at least £30,000/year (excluding materials/VAT)
- Up-to-date tax compliance (CT, PAYE, VAT, CIS all filed and paid)
CIS and Materials
CIS deductions apply to the labour element only. Always itemise materials separately on invoices.
Common Issues
- Timing differences — CIS uses payment dates, not invoice dates
- Missing deduction statements — chase contractors for these; you need them as evidence
- Late CIS returns — £100/month penalty per return (not CT-deductible)
Construction company filing a CT600? Use Taxpipe — £59, claim your CIS refund with confidence.