The 4 CIS Mistakes That Cost UK Subcontractors Money (2026)

A contractor pays you, the number’s lower than you quoted, and you’re stood in a van doing mental maths to work out whether it’s right. If you’ve worked under the Construction Industry Scheme for any length of time, you know that moment.

CIS isn’t complicated in theory. But four specific mistakes come up again and again on-site — each one quietly costing subcontractors money. Fix these, and the scheme mostly runs itself. Miss one, and you’re either losing cash you should have kept or scrambling for paperwork in January.

This is the troubleshooting companion to our full CIS explainer — if you want the ground-up guide first, start there.

The single most common CIS dispute. Under CIS, deductions apply only to labour — materials are exempt. If your invoice reads as one lump sum, contractors will often just deduct 20% (or 30%) from the whole amount, materials included. You lose 20% of every £100 you spent at Travis Perkins.

Fix:every CIS invoice needs labour and materials shown as separate lines. Not a note at the bottom, not "£X inclusive of materials" — two clearly labelled figures the contractor can pass straight to their CIS payment run. If your current invoice template doesn’t force this split, you’re relying on the contractor being generous.

CIS deducts at three different rates depending on where you sit with HMRC:

• 20% — registered with CIS as a subcontractor.
• 30%— not registered (or HMRC can’t verify you).
• 0% — gross payment status.

An unregistered subcontractor loses 50% more per invoicethan a registered one — for identical work. That’s the whole difference between a busy year and a stressful one. If you’re unsure of your status, check on GOV.UK before your next job.

Fix:register with HMRC for CIS the moment you take construction subcontract work. It’s free, it takes ten minutes, and the 10-percentage-point difference from unregistered → registered pays for itself on the first invoice. For established subcontractors, our gross payment status guide covers the eligibility tests and the cash-flow trade-off.

The formula is straightforward on paper:

But three things go wrong in practice. First, most subcontractors do it on the gross labour figure and forget to strip VAT out — over-deducting on VAT-registered invoices. Second, hand-arithmetic errors on £3,000+ figures under fatigue at the end of a long day. Third, rounding drift over 30-50 invoices a year adds up to real money.

Fix: stop doing the sum by hand. Our free CIS deduction calculator takes 20 seconds and shows you the exact amount before your contractor calculates it themselves. If they disagree, you have the maths right there to challenge it.

CIS deductions are an advance payment of your tax — they count against what you owe at year end. Two things follow:

• Most subcontractors are due a refund when their profit-after-expenses is lower than the labour figure HMRC deducted against.
• To claim it, you need the deduction total for the whole tax year — every Payment and Deduction Statement (PDS) the contractor sent, reconciled against your invoices.

Subcontractors who scramble PDS slips together in January usually miss deductions and under-claim their refund. HMRC won’t chase you to correct that.

Fix: track deductions per invoice as they happen, not once a year. Our CIS refund guide walks through the Self Assessment reconciliation step by step.

None of these are complicated. They’re all rooted in the same thing: an invoicing workflow that wasn’t built for CIS in the first place. Generic accounting software treats CIS as an add-on module — something you switch on and configure line by line for every invoice. That’s where the maths errors and un-split labour lines creep in.

Honest Invoices was built around CIS from the start. On every job-based invoice we split labour and materials automatically, apply the correct deduction rate per your client’s CIS status, and keep a year-to-date total of deductions ready for Self Assessment. You invoice, the maths is right, the records are already in order.