Carpenter CIS Deductions and Pay: 2026 Guide

The three deduction rates: 20%, 30% or 0%

Every CIS payment to you falls into one of three buckets, decided by your verification status when the contractor checks with HMRC. Registered and verifiable: 20% comes off the labour element. Unregistered, or registered but unverifiable — wrong UTR, name mismatch, no record found: 30%. Holding gross payment status: 0%, the full invoice paid gross and the tax settled entirely through Self Assessment.

The 30% rate is the expensive one, and it catches more carpenters than it should. Ten points of extra deduction on a £2,000-a-week labour invoice is £200 a week — £10,400 across a full year — sitting with HMRC until your tax return reclaims it. It is not lost money, but it is money you cannot touch for months, and for a carpenter funding materials and a van it can strangle cash flow. Registration is free and takes a phone call or an online application; there is no reason to invoice at 30% that survives scrutiny.

Gross payment status is the opposite end: no deductions at all, available to established businesses with a clean tax record that meet HMRC's turnover and compliance tests. Most one-man-band chippies will not qualify early on — the tests expect turnover in the tens of thousands and a history of on-time filing — but it is worth knowing the 0% rate exists, because it is the long-term target if you build the business up.

What CIS is taken from — and what it is not

The percentage applies to the labour element of your invoice only. If you supply timber, sheet materials or fixings and charge them on the invoice, the deduction comes off the labour figure — not the materials. VAT is excluded entirely. Plant hire is excluded. Any materials the contractor pays for directly never touch your invoice at all.

This is where carpentry invoicing needs discipline. A kitchen fitter who invoices £4,000 labour plus £2,500 of materials has CIS taken on £4,000 — £800 at 20%. The same job invoiced as a single £6,500 line risks the contractor deducting on the whole amount: £1,300, an extra £500 of your money held until year end. Always split labour and materials as separate lines, with the materials costed at what you paid.

Do not mark materials up to dodge the deduction either. Charging £2,500 of materials at £3,000 to shrink the labour proportion is the kind of thing HMRC notices when the numbers do not tie to receipts — and the penalty interest costs more than the cash-flow gain ever did. Invoice honestly, split the lines, and keep every receipt.

A worked invoice example

Here is CIS on a typical second-fix carpenter's weekly invoice. Labour for the week: £3,200. Timber and fixings supplied by you, charged at cost: £600. Total invoice: £3,800 plus VAT.

The contractor verifies you as CIS-registered and deducts 20% from the labour element only: 20% of £3,200 is £640. The materials are untouched. You receive £3,200 minus £640 plus £600 — £3,160 — and the £640 goes to HMRC as an advance payment toward your tax and National Insurance.

At Self Assessment, the £640 is credited against your actual liability. If your real tax and NI for the year come to less than the total CIS deducted across all your invoices — which is common at carpenter earnings, because the flat 20% often over-covers the real bill — HMRC repays the difference. The £640 is not gone; it is parked.

Price work under CIS

Price work does not change how CIS works — it only changes how the labour figure is built. Whether you priced the job at £45 a door, £4 a metre of skirting or £750 for the kitchen, the invoice's labour element is what the 20% applies to. Eight doors at £45 is £360 of labour for the day; CIS takes £72 of it, and £288 reaches you.

This has a practical consequence for how fast chippies think about price work. The gross daily figure on price — £360 for those eight doors — is not the day's money; £288 is, until the tax return. Price-work carpenters who budget from the gross invoice figure and spend from it are the ones who hit January with no tax reserve. Budget from the post-CIS figure and the return becomes a bonus, not a rescue.

One more wrinkle: mixed invoices on price work still need the labour-materials split. If that £750 kitchen invoice includes £200 of materials you supplied, the CIS deduction is 20% of £550, not £750. State the materials line separately on every price-work invoice, just as on day-rate ones.

Moving between contractors: keeping your CIS statements

Carpenters move. A month on a new-build estate with one contractor, six weeks of kitchens with another, a fortnight of shuttering for a civils firm — and every contractor deducts CIS and issues you a monthly deduction statement. Those statements are your proof of what HMRC already holds in your name, and you need every one of them when the Self Assessment goes in.

Build a simple system and never deviate from it: a folder — physical or digital — per tax year, with every contractor's monthly statements filed as they arrive. Photograph paper statements the day they land; contractors go bust, change accountants and lose records, and HMRC will ask you to evidence deductions it cannot match. The statement shows the contractor's name, the gross paid, the materials excluded and the amount deducted — the four numbers your return is built from.

Reconcile as you go, not in January. When a statement arrives, check the gross against your invoice and the deduction against 20% of the labour line. Errors are rare but they happen — a contractor deducting on materials, or applying 30% when you are registered — and they are fixable in the month, not a year later.

Umbrella vs CIS for agency carpenters

Agency chippies usually face a choice: work CIS-direct with the agency as the contractor, or go through an umbrella company. Under the umbrella, you are effectively an employee of the umbrella for tax purposes — PAYE income tax and National Insurance are deducted from your pay, and the umbrella charges a margin, typically £15 to £30 a week, for running the payroll.

CIS-direct keeps the 20% deduction and the self-employed status: you invoice, the agency deducts, you file Self Assessment. The umbrella route gives you a payslip and none of the admin; the CIS route usually leaves more in your pocket across the year, because there is no weekly margin and your expenses are claimed on your own return rather than through the umbrella's processes.

Which is better depends on how you value your time and how much you claim. A carpenter with significant allowable expenses — van, tools, travel between sites — often does better CIS-direct, where every legitimate expense reduces the taxable profit on their own return. A carpenter who wants zero paperwork and is happy to pay the weekly margin may prefer the umbrella. What you should never do is let an agency push you into an umbrella without seeing the margin and the take-home illustration in writing first.

Tool costs and other allowable expenses

Carpenters carry some of the most expensive hand and power tool kits in the building trades — track saws, nail guns, routers, laser levels — and the kit wears out on site. As a self-employed carpenter, tools bought wholly and exclusively for the work are allowable expenses on your Self Assessment, reducing the profit that income tax and National Insurance are charged on. Keep the receipts; the total across a year surprises most chippies.

Tools are not the only line. Van costs and fuel for business travel, parking on site, phone used for work, protective equipment, CSCS card and NVQ fees, and accountancy fees for the return itself are all claimable where the rules allow. Travel between home and a single permanent workplace is not claimable — but travel between temporary sites is, which covers most site carpenters' working pattern.

The expenses do not change your CIS deductions — those still come off the gross labour invoice. They change the final bill the deductions are set against, which is exactly why CIS so often overpays: 20% of gross labour is frequently more than the tax due on profit after expenses. The difference comes back to you.

Registration and reclaiming overpaid CIS

If you have not registered yet, do it before your first invoice: registration as a CIS subcontractor is free, done with HMRC online or by phone, and it is the difference between 20% and 30% on every payment for the rest of your career. Have your National Insurance number and UTR ready; if you do not have a UTR, HMRC issues one as part of the process.

Reclaiming overpaid CIS happens through your Self Assessment tax return. You enter your total turnover, your expenses, and the CIS deductions suffered across the year — backed by those monthly statements — and HMRC computes the real liability. Where the deductions exceed the bill, the excess is repaid, usually within a few weeks of filing. File early in the tax year and the money comes back early; file in January and you have lent HMRC your cash interest-free for the best part of a year.

One final point: CIS registration is not the same as registering as self-employed. You need both — the self-employed registration tells HMRC you are in business, the CIS registration tells contractors which deduction rate to apply. If you started work and neither is done, sort the self-employment registration first and the CIS registration immediately after.

Where the rules come from

CIS rates and rules in this guide are from GOV.UK's Construction Industry Scheme pages for subcontractors and contractors, verified on 24 September 2026: 20% deduction for registered subcontractors, 30% for unregistered or unverifiable subcontractors, 0% with gross payment status; deductions are advance payments toward income tax and National Insurance; VAT, directly-paid materials and plant hire are excluded; registration is free; overpaid CIS is reclaimed via Self Assessment.

The invoice examples use round illustrative figures — £3,200 labour plus £600 materials, £45 a door — stated as examples so you can see the arithmetic, not as quoted rates. Your actual deduction depends on your verification status and your invoice's labour element. Tax bands quoted are 2026/27 England figures; the Personal Allowance of £12,570 applies UK-wide.

Reviewed and updated

This guide was last reviewed on 23 September 2026. CIS is a stable scheme — the 20/30/0 structure has not moved — but always check the GOV.UK pages linked in the sources before making decisions that depend on the rules, such as applying for gross payment status. If your situation is unusual — overseas work, limited company, disputes over deductions — talk to an accountant rather than relying on a general guide.