How CIS bookkeeping works for subcontractors is one of those things that sounds technical but, once you understand the basics, makes a lot more sense. If money is being deducted from your payments by contractors before you get paid, this article is going to explain exactly what’s happening, what you need to record, and how to get that money back.

What Is CIS and Why Does It Affect Your Books?

CIS stands for the Construction Industry Scheme. It’s a system set up by HMRC where contractors deduct money from a subcontractor’s payment and pass it directly to HMRC on their behalf. The deduction rate is either 20% if you’re registered under CIS, or 30% if you’re not.

Those deductions aren’t tax you owe on top of everything else. They’re advance payments toward your tax bill. The problem is, if you don’t keep proper records of your income, expenses and the deductions that have been made, you can end up either overpaying or facing a nasty surprise at year-end. A common complaint from subcontractors is that CIS deductions put real pressure on cash flow, and that pressure is made worse when the bookkeeping isn’t in order.

What Records Do Subcontractors Need to Keep?

As a subcontractor, your bookkeeping job is to keep a clear record of every payment you receive, including the gross amount before any CIS deduction was made. You also need to record each CIS deduction separately, because those are the figures you’ll use when you file your self assessment tax return. Your contractor should give you a CIS deduction statement each month, and those statements are your evidence.

On top of that, you need to track your business expenses properly. Things like van costs, fuel, tools, materials, protective clothing and any site-related travel can all reduce your taxable profit. HMRC’s CIS record-keeping guidance sets out what contractors must document, and while the rules focus on contractors, you as a subcontractor need the matching records to support your own return. If you’re stuffing statements in a drawer and hoping for the best, you’re likely leaving money on the table.

How Do You Actually Get the Money Back?

CIS deductions are offset against your tax and National Insurance liability when you file your self assessment tax return each year. If the total deductions taken from you across the year are more than your actual tax bill, HMRC refunds the difference. That’s why good bookkeeping matters so much here. If you don’t record all your deductions, or you miss out on claimable expenses, your refund ends up smaller than it should be.

The self assessment deadline is 31 January for online returns. If you miss it, you’ll pick up late filing penalties before HMRC even looks at whether you owe anything. I’d also say this: the earlier you file after April, the sooner any refund lands. A lot of subcontractors I speak to have been waiting months longer than they needed to simply because they put it off.

New CIS Rules From April 2026: What’s Changed?

There have been significant updates to CIS legislation that took effect from 6 April 2026. The changes largely target fraud within construction supply chains, with updated HMRC guidance on CIS compliance and fraud measures now in place. For subcontractors, this is worth knowing because it signals that HMRC is paying closer attention to how the scheme is being used across the industry.

For contractors, the stakes have risen sharply. Companies with gross payment status, which means they get paid without CIS deductions taken, can now lose that status for five years if they fail to spot fraud in their supply chain. Directors can be held personally liable for penalties under the new rules. As a subcontractor, the practical takeaway is that your paperwork needs to be clean and your CIS status properly maintained, because contractors under pressure to comply will be more careful about who they work with.