A 30% CIS deduction usually means the contractor could not verify you at the standard registered rate. Check the registration and identity details with the contractor. The deduction rate is an advance-payment rate, not the final tax rate on your profit.
What the two rates actually are
- 20% — net payment status where you are registered for CIS and the contractor can verify you with HMRC.
- 30% — higher rate where you are not registered, or the contractor cannot verify you.
- 0% CIS deduction — only where you hold gross payment status (you still pay tax later through Self Assessment or Corporation Tax as applicable).
Deductions are calculated on the labour element after materials that the contractor is satisfied relate to the job (and excluding VAT). A higher rate hurts cash flow now; it does not permanently “set” your tax at 30%.
Why 30% shows up in practice
- You never registered as a CIS subcontractor
- The contractor used wrong name, Unique Taxpayer Reference (UTR) or National Insurance details
- Verification failed or timed out and the contractor defaulted to the higher rate
- You changed from sole trader to company (or the reverse) and the contractor still holds old details
What to do if you think the rate is wrong
- Confirm you are registered for CIS with HMRC for the correct business structure.
- Give the contractor the exact details HMRC holds and ask them to verify again before the next payment.
- Check the payment and deduction statement — it should show the deduction taken for that tax month.
- Keep working: even at 30%, the money still counts as an advance towards your eventual bill when claimed correctly — see CIS tax refunds and CIS on Self Assessment.
Gross payment status is a different lever
If cash flow is the real problem and you meet HMRC’s tests, gross payment status means contractors pay you without CIS deductions. That is not automatic, and it does not remove the duty to pay tax. It also does not decide whether you are employed or self-employed.
Common mistake
Assuming “I’m a basic-rate taxpayer so CIS should be 20% of my tax band.” CIS rates are scheme deduction rates tied to registration and verification, not to your Income Tax band.
Separately, do not treat a 20% or 30% CIS deduction as proof you are “already digital” for Making Tax Digital. CIS is about how contractors pay you; MTD for Income Tax is about digital records and quarterly updates when qualifying income crosses HMRC’s thresholds. If that might apply, start with Check if MTD applies rather than guessing from your deduction rate.
If you want help sorting CIS credits on a Self Assessment return after a year of mixed 20%/30% statements, TaxSimba’s Self Assessment service can prepare that return with an accountant. We cannot force a contractor to re-verify you, and we do not guarantee HMRC will change a past deduction rate. Start Self Assessment with TaxSimba.
Check the identity details behind the deduction rate
Illustrative preparation example.
Ask the contractor which details were used for verification and compare them with your registration record. Keep the statement showing the deduction actually made. A corrected identity record is a different issue from the eventual annual tax calculation.
Check: Which name, UTR and registration details need confirming with the contractor?
| Check | Practical action |
|---|---|
| Do the contractor's details match HMRC's record? | Check the legal structure, business name and correct registration references. |
| What verification result did the contractor receive? | Resolve the underlying mismatch rather than choosing a rate from your Income Tax band. |
| Are deductions shown correctly on statements? | Keep the actual amounts and query discrepancies promptly. |
Is 20% CIS the same as basic-rate Income Tax?
No. CIS withholding follows scheme status and verification. Your annual liability is calculated separately from all relevant income and reliefs.
Can I assume past higher deductions disappear after registration?
No. Keep the actual deduction evidence and follow the proper correction or tax-credit process. Do not overwrite historical statements with a preferred rate.
Download a checklist for this guide
- Check your CIS registration and business structure.
- Confirm exact details supplied to the contractor.
- Record the verification issue and follow-up.
- Review each payment and deduction statement.
- Keep actual deductions for the annual return.