What is a CIS payment and deduction statement?

It is a written document that a contractor must provide to a subcontractor after making a CIS-deducted payment. It shows the gross payment, materials cost, labour amount, deduction rate, deduction amount and net payment. The subcontractor uses this statement as proof of tax deducted when filing their Self Assessment return.

When must the contractor provide this statement?

Under the Income Tax (Construction Industry Scheme) Regulations 2005, contractors must provide the payment and deduction statement within 14 days of the end of the CIS tax month in which the deduction was made. CIS tax months run from the 6th of one month to the 5th of the next.

What happens if the contractor does not provide a statement?

Failure to provide a CIS payment and deduction statement is an offence under the Finance Act 2004. HMRC can impose penalties on contractors who fail to comply. Without the statement, the subcontractor has no documentary proof of the deduction, which can cause problems when claiming credit on their tax return.

Can the subcontractor claim back CIS deductions?

Yes. CIS deductions are advance payments of income tax and National Insurance. The subcontractor offsets them against their tax liability on their Self Assessment return. If total CIS deductions exceed the tax owed, the subcontractor can claim a refund from HMRC. This statement is the key evidence for that claim.

What is the HMRC verification number?

The verification number is a reference issued by HMRC when a contractor verifies a subcontractor's CIS status before making the first payment. The contractor must verify every subcontractor with HMRC to confirm the correct deduction rate (20%, 30% or 0%). The verification number should be recorded on all payment and deduction statements.

CIS Payment and Deduction Statement Template

Use this free template to create a CIS payment and deduction statement, which contractors in the UK construction industry must provide to their subcontractors after making a payment under the.

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contractor

Contractor Name / Business Name*

Contractor Address*

Contractor UTR Number*

The contractor's 10-digit Unique Taxpayer Reference

Contractor PAYE / Employer Reference (optional)

subcontractor

Subcontractor Name / Business Name*

Subcontractor Address*

Subcontractor UTR Number*

HMRC Verification Number*

Issued by HMRC when the subcontractor's CIS status is verified

Payment Details

CIS Tax Month*

The CIS tax month in which the payment falls

Payment Date*

Gross Payment (£)*

Cost of Materials (£)

Not subject to CIS deduction

Labour Amount (£)*

Subject to CIS deduction

CIS Deduction Rate*

CIS Deduction Amount (£)*

Deduction rate applied to the labour amount

Net Payment to Subcontractor (£)*

Document Preview

CIS PAYMENT AND DEDUCTION STATEMENT This statement is issued in accordance with the Income Tax (Construction Industry Scheme) Regulations 2005. CONTRACTOR [contractorName] [contractorAddress] UTR: [contractorUtr] SUBCONTRACTOR [subcontractorName] [subcontractorAddress] UTR: [subcontractorUtr] Verification No: [verificationNumber] -------------------------------------------------- PAYMENT DETAILS -------------------------------------------------- CIS Tax Month: [taxMonth] Payment Date: [paymentDate] Gross Payment: £[grossPayment] Labour (subject to CIS): £[labourAmount] CIS Deduction Rate: [cisDeductionRate]% CIS Deduction Amount: -£[deductionAmount] ------------------ NET PAYMENT: £[netPayment] -------------------------------------------------- STATEMENT -------------------------------------------------- This statement confirms that [contractorName] has made a CIS deduction of £[deductionAmount] at the rate of [cisDeductionRate]% from the payment to [subcontractorName]. The deduction has been calculated on the labour element only (£[labourAmount]). The contractor will pay the deducted amount of £[deductionAmount] to HMRC on behalf of the subcontractor. This deduction counts as an advance payment of the subcontractor's tax and National Insurance liability. The subcontractor should retain this statement as evidence of CIS deductions for their Self Assessment tax return. CIS deductions can be offset against the subcontractor's income tax and National Insurance liability, or a refund can be claimed if deductions exceed the tax owed. Issued by: ______________________________ [contractorName] Date: [paymentDate]

Important Notes

Legal Disclaimer

The Construction Industry Scheme (CIS) is governed by the Finance Act 2004, Part 3, Chapter 3, and the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045). Regulation 4 requires contractors to provide subcontractors with a written statement of CIS deductions within 14 days of the end of the tax month in which the deduction was made. The statement must show the contractor's name and UTR, the subcontractor's name and UTR, the verification number, the gross payment, materials (if applicable), the deduction rate, the deduction amount, and the net payment. Failure to provide a CIS deduction statement is an offence that may result in penalties under Section 72 of the Finance Act 2004. Contractors must also submit monthly CIS returns to HMRC by the 19th of each month and pay deductions to HMRC by the 22nd (electronic) or 19th (postal).

This template is provided for informational purposes only and does not constitute legal advice. For complex legal matters, we recommend consulting a qualified solicitor.

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