CIS Deduction Statement: What It Is and What It Must Include

A CIS deduction statement (also called a payment and deduction statement) is the document a contractor must give every subcontractor when deductions have been made under the Construction Industry Scheme. Without it, the subcontractor can't accurately claim their CIS credits on their tax return.

Here's what the statement is, when it must be issued, what it must contain, and what subcontractors should do with it.

What a CIS Deduction Statement Is

When a contractor pays a subcontractor under CIS, they deduct 20% or 30% from the labour portion and pass it to HMRC. The deduction statement is the subcontractor's record of that transaction — it shows what was paid, what was deducted, and what the net payment was.

It's the paper trail that connects the contractor's CIS return to the subcontractor's Self Assessment or Corporation Tax return. If the contractor files their return correctly but the subcontractor doesn't have the statement, the subcontractor can't verify or claim the credit HMRC holds for them.

When the Statement Must Be Issued

According to HMRC guidance on making CIS deductions, contractors must give subcontractors a payment and deduction statement within 14 days of the end of each tax month.

The CIS tax month runs from the 6th of one month to the 5th of the following month. So:

• The tax month 6 May – 5 June ends on 5 June
• The statement deadline for all payments in that period is 19 June

This is the same deadline as the monthly CIS return. The contractor is filing the return with HMRC and issuing the statement to the subcontractor at the same point each month.

One statement per payment per tax month. If you made multiple payments to the same subcontractor in a tax month, all of them can be covered in a single statement for that period.

What the Statement Must Include

A CIS payment and deduction statement must show:

• Contractor's name and employer reference number (the CIS scheme reference)
• Subcontractor's name — the name under which they're registered with HMRC for CIS
• Subcontractor's UTR — their Unique Taxpayer Reference
• Verification number — the number HMRC gave when the contractor verified the subcontractor (where applicable)
• The tax month the payment falls in
• The gross amount paid — the total before any deductions
• The amount of materials included — the qualifying materials deducted from the gross before CIS is applied
• The amount of CIS deduction taken — the 20% or 30% applied to the labour-only portion
• The net payment — what the subcontractor actually received after the deduction

The statement can be a formal HMRC form or any document that includes all of the above. HMRC has published a standard payment and deduction certificate, but contractors are not required to use that specific form — they can issue the statement in any format that includes all required information.

How the Statement Connects to Your Tax Return

As a subcontractor, the deduction statement is your evidence for the CIS credit you're claiming.

When you complete your Self Assessment tax return:

1. You declare your full gross income — the amount BEFORE the CIS deduction
2. You enter the total CIS deductions taken across all statements for the tax year
3. HMRC calculates your tax bill on the full income, then offsets the CIS deductions

If your statements show £8,000 in CIS deductions taken across the year, and your actual tax bill is £5,500, HMRC refunds £2,500. But you need the statements to enter the deduction figure accurately. Estimating or guessing creates errors that trigger HMRC queries.

Limited companies use the statements to offset CIS deductions against PAYE liabilities through monthly Full Payment Submissions and Employer Payment Summaries.

What to Do If You Don't Receive Your Statements

Contractors are legally required to issue the statement within 14 days of the tax month end. If yours haven't arrived:

1. Contact the contractor directly. Explain you need the statement to complete your tax records. Most contractors will issue it quickly once asked — it's an oversight more often than a deliberate omission.

2. Check whether the contractor has filed their CIS return. The contractor's return to HMRC and your statement should be issued at the same time. If the contractor has filed but hasn't sent your statement, HMRC will have the deduction on record — you just need the documentation.

3. Keep records of payments received. Even without a formal statement, your bank statements showing payments from the contractor, combined with copies of your invoices, provide partial evidence. A good accountant can work with this, but it's messier than having the statements.

4. If the contractor refuses or has disappeared. Contact HMRC directly to confirm what deductions are on record for your UTR. HMRC can tell you what was reported by contractors in a given tax year, which lets you reconcile against your own records.

How to Store and Organise Statements

Keeping statements organised saves significant time at Self Assessment. A simple approach:

• Create a folder per tax year (e.g. "CIS Statements 2025-26")
• File each statement as you receive it, naming by contractor and tax month
• At year end, add up all the deduction amounts — this is the figure that goes on your tax return

HMRC requires you to keep tax records for at least 5 years after the Self Assessment filing deadline for the relevant tax year. For the 2024/25 tax year (filing deadline 31 January 2026), keep records until at least 31 January 2031.

The Contractor's Perspective

If you're a contractor issuing statements:

• Issue within 14 days of each CIS tax month end (same timing as your monthly return)
• Include all required fields — name, UTR, verification number, tax month, gross, materials, deduction, net
• Issue one statement per subcontractor per tax month, even if no deductions were made that month (some contractors do this for clean records, though strictly it's only required when deductions are made)
• Keep copies of all statements you issue — these must match your CIS return submissions

For the full picture on CIS contractor obligations — returns, verification, payments — see our CIS explainer guide.

Using the CIS Deduction Calculator

Before you invoice, knowing exactly what the deduction will be helps you manage cash flow — you know what net payment to expect before the invoice is even processed. Use the CIS Deduction Calculator to enter any gross payment and see the deduction at 20%, 30%, or 0%.

For guidance on structuring invoices so the contractor can apply the correct deduction, see our CIS invoice template guide.

This is general guidance on CIS deduction statements, not tax advice. CIS has specific compliance rules — consult a qualified accountant or HMRC for your circumstances.

Sources

• CIS contractor: make deductions and pay subcontractors — GOV.UK
• CIS payment and deduction certificate — GOV.UK
• What you must do as a CIS subcontractor — GOV.UK