CIS for Brighton builders and contractors: what gets deducted and how to claim it back

The Construction Industry Scheme (CIS) is one of the most commonly misunderstood parts of the UK tax system. Brighton has a busy construction sector — new builds, renovations, loft conversions, commercial fit-outs — and thousands of local tradespeople are caught by CIS without fully understanding what it means for their tax position.

This article explains how CIS works, what actually gets deducted from your payments, and — crucially — how subcontractors reclaim what they have overpaid.

What is CIS?

CIS requires contractors to deduct money from payments made to subcontractors and pass it to HMRC as an advance against the subcontractor's tax and National Insurance bill. It is a withholding system — not a final tax. Everything deducted can be offset against your actual tax liability at the end of the year.

What can be deducted from?

CIS deductions only apply to the labour element of your invoice. If your invoice includes materials, the contractor should only deduct from the labour portion — not the total. This is a common mistake that results in subcontractors being over-deducted. Your invoices should clearly separate labour and materials to protect yourself.

How do subcontractors reclaim CIS deductions?

CIS deductions are credited against your Self Assessment tax bill. When you file your annual return, the total CIS deducted from your payments is subtracted from what you owe. If more has been deducted than your total tax bill, HMRC will refund the difference — often within a few weeks of filing.

Many Brighton tradespeople do not realise how large their refund entitlement can be, particularly if they have significant allowable expenses such as tools, van costs, and workwear.

Gross payment status — is it worth applying for?

Gross payment status (GPS) allows you to receive full payment from contractors with no CIS deduction. To qualify, you must have a good compliance history with HMRC, a UK bank account in the business name, and meet certain turnover thresholds. From April 2026, HMRC has stronger powers to remove GPS immediately if they believe a business is involved in fraudulent supply chains — so maintaining compliance is essential.

Common CIS mistakes in Brighton construction

• Not being registered as a subcontractor — results in 30% deductions instead of 20%
• Combining labour and materials on invoices without separating them
• Not keeping CIS vouchers (payment and deduction statements) from each contractor
• Missing the Self Assessment deadline and losing the chance to reclaim deductions promptly
• Assuming CIS applies to all work — it does not apply if you are working directly for a homeowner

What records do you need to keep?

Every contractor you work for must give you a payment and deduction statement each tax month. Keep every one of these — they are the evidence your accountant needs to offset your deductions against your tax bill. Losing them does not mean the money is gone, but it does make the reclaim process more complicated.