If a contractor is taking 30% from your pay instead of 20%, there are only two reasons GOV.UK gives: you're not registered for the Construction Industry Scheme, or the contractor couldn't verify you. This guide explains both, what GOV.UK and HMRC's manuals say about moving to 20%, and how the 30% deductions are treated when you send your Self Assessment return. It's written for sole traders.
The short answer
- Why 30%. GOV.UK's get paid page says contractors take 20% if "you're registered for CIS" and "they can verify you". "If either do not apply, contractors will take deductions at a higher rate of 30%."
- Getting to 20%. If you're not registered, register. If you are, the contractor needs to verify you using the exact details you registered with.
- The extra isn't lost. GOV.UK says CIS deductions "count as advance payments towards your tax and National Insurance bill". On your return you record "the total deductions contractors have taken". That's every deduction, at whatever rate.
Reason 1: you're not registered
GOV.UK's overview says: "If you do not register for the scheme, contractors must deduct 30% from your payments instead."
To register online, GOV.UK's how to register page says you'll need your legal business name (and trading name, if different), your UTR, your VAT number if you're VAT registered, and the date you started trading. You may also need your National Insurance number.
You need a UTR to use the online service. If you don't have one, GOV.UK says to register as a new business for Self Assessment "and choose 'working as a subcontractor' when prompted. You'll be registered for Self Assessment and CIS at the same time." If you can't register online, there are postal forms.
Reason 2: the contractor can't verify you
Before paying a new subcontractor, a contractor checks with HMRC. GOV.UK's verify subcontractors page says HMRC tells them whether you're registered and what rate to use. It adds: "The details you provide to verify the subcontractor must exactly match the details the subcontractor used to register with HMRC."
HMRC's CIS manual (CISR51060) says a subcontractor is most likely "unmatched" because either they haven't registered or completed registration, or the contractor "has incomplete, or has misquoted, the subcontractor details".
Things that commonly cause a mismatch, from GOV.UK and HMRC's CIS 340 guide:
- Different details. GOV.UK says to give a new contractor "the exact details you gave when you registered", including your UTR and "legal business or trading name".
- Trading name only. CIS 340 (paragraph 6.3) says you should give your legal name as registered, with your UTR and National Insurance number. "Without this information, we may be unable to identify the subcontractor", and HMRC will then tell the contractor to deduct at the higher rate.
- A temporary NI number. GOV.UK tells contractors: "you cannot verify temporary numbers, which start with 'TN' or 2 digits".
The verification number on your statement
When verification fails, HMRC gives the contractor a reference with one or two letters on the end, such as V0004528765/A (CIS 340, paragraph 3.8). The contractor must show it on your payment and deduction statement for each payment taken at 30%. CIS 340 says: "The subcontractor will need this reference number later when seeking credit for any of the deductions made."
So if a statement shows 30% and a verification number ending in a letter, keep it with your other statements. Our guide CIS payment and deduction statements explained covers the other lines.
Moving from 30% to 20%
What HMRC's manuals describe:
- Once you've registered, HMRC sends you a confirmation letter (CIS313). The manual says that at the same time HMRC writes to the contractors who deducted at the higher rate "to notify them of the change of payment status" (CISR51060, CISR51120).
- Until then, nothing changes. CIS 340 (paragraph 3.9) says the contractor "should continue to pay the subcontractor in the same way until we tell them about any change".
- If it was a mistake in your details, the manual says "a further verification check can be carried out before payment takes place", once the details are right.
If you and the contractor can't agree about a deduction, CIS 340 (paragraph 6.2) says either of you "may ask us for a ruling".
What happens to the 30% deductions
For a sole trader, GOV.UK's pay tax and claim back deductions page says that at the end of the tax year you record:
- "your total pay before deductions were taken, as 'income'"
- "the total deductions contractors have taken, as 'CIS deductions'"
"HMRC will work out how much tax you owe and take off any deductions taken by contractors." If you still owe tax, it's due by 31 January. "If you're due a tax refund, HMRC will pay the money back."
Two points from HMRC's manual matter if you were paid before you registered:
- Deductions taken before registration "will not automatically flow" from the contractors' returns to your new record (CISR51060). The manual says those unmatched periods "must be linked to the UTR record in order to calculate overall annual totals" (CISR51120).
- If HMRC can't find the contractors, it may write asking who paid you and for what periods. The manual says the letter warns that without a reply you "may not be given full credit for all of the CIS deductions that have been made" (CISR42190).
That's why your own statements matter: they show each deduction, its rate and the verification number.
Worked example (made-up figures)
Ash is a sole trader. Every figure here is invented, and there are no materials or VAT.
Ash started work for a contractor in April 2025 but didn't finish registering until August. For the tax months ending 5 May to 5 August 2025, the contractor couldn't verify Ash and deducted 30%. From the tax month ending 5 September, after HMRC's notice, it deducted 20%.
| Tax months | Statements | Gross (each) | Rate | Deducted (each) | Deducted (total) |
|---|---|---|---|---|---|
| Ending 5 May to 5 Aug 2025 | 4 | £2,000 | 30% | £600 | £2,400 |
| Ending 5 Sep 2025 to 5 Apr 2026 | 8 | £2,000 | 20% | £400 | £3,200 |
| 2025–26 | 12 | £5,600 |
Ash's two totals for the 2025–26 return are £24,000 of pay before deductions and £5,600 of CIS deductions. The £5,600 includes the 30% months. If every month had been at 20%, the deductions would have been £4,800, so £800 more was taken in advance. That doesn't by itself mean £800 comes back: HMRC works out the tax for the year and takes off all £5,600. What's left, either way, depends on the rest of Ash's return.
The four 30% statements each carry a verification number ending in a letter, so Ash keeps them with the rest.
FAQ
I'm registered but still being taxed at 30%. Why? GOV.UK says 30% applies if you're not registered or the contractor "cannot verify you". Check that the contractor has the exact legal name, UTR and National Insurance number you registered with.
Can the contractor pay back the extra 10% themselves? GOV.UK says deductions are passed to HMRC and count towards your tax. For a sole trader, its route is the Self Assessment return. If there's a dispute, CIS 340 says that if "some or all of the deduction was not necessary, we'll repay the excess to the subcontractor".
Can I avoid deductions altogether? GOV.UK says you can apply for gross payment status if your business passes HMRC's tests. Our guide CIS gross payment status: the three tests explains them.
When will I get any refund? Our guide CIS refund: when you can claim it and how long it takes covers GOV.UK's timescales.
Spotting 30% months in a year of statements
To check one deduction by hand, the free CIS deduction check works out the amount liable the way GOV.UK describes and shows 20% and 30% of it. For a whole year, cissplit reads your statements (PDFs or photos), checks the rate on each one and flags every deduction taken at 30%. It also flags gaps between a contractor's months, then totals the tax year with every statement listed by contractor. Your first 3 statements are free, with no sign-up. It doesn't register you, contact HMRC or fill in your return, and you still check the figures against your statements.
This isn't tax advice. Check GOV.UK's CIS guidance for subcontractors or an accountant for your situation, and check the figures before you submit anything.