What is a CIS verification, and why does it matter to you?
Before a contractor pays you for the first time, they have to check you with HMRC. That check is called verification. If it fails, they must take 30% instead of 20% from your labour. Here is what happens, what details matter and how to make sure it goes through.
On this page
What verification means
Under the Construction Industry Scheme, a contractor must "verify" a new subcontractor with HMRC before paying them. HMRC tells the contractor two things: whether you're registered for CIS, and what rate of deduction to use, or whether they can pay you without making deductions. You never do the verification yourself. The contractor does it, using their own details and yours.
How contractors verify you
GOV.UK says contractors can use the free HMRC CIS online service or commercial CIS software. Contractors who need to verify more than 50 subcontractors have to use commercial software. They also have to verify subcontractors they've used before if those people haven't been included on a CIS return in the current or last two tax years. So a contractor who hasn't used you for a while may need to check you again.
The details they need from you
HMRC says the details the contractor enters must exactly match the details you used to register. For a sole trader that means your UTR and National Insurance number. A temporary National Insurance number, one starting with "TN" or two digits, can't be verified. A limited company needs its company name, company UTR and registration number, and a partnership needs the nominated partner's details, trading name and partnership UTR.
GOV.UK tells subcontractors to give their contractor the exact details they gave when they registered, including their UTR and legal business or trading name. A spelling difference, an old trading name or a typo in the UTR is enough to cause a failed match.
Why it decides your deduction rate
The standard 20% deduction applies if you're registered for CIS and the contractor can verify you. GOV.UK says that if either of those isn't true, the contractor takes the higher rate of 30%. If you have gross payment status, the contractor makes no deduction. The rate on your pay is therefore set by the verification result, not by the contractor's preference.
| Labour on the invoice | Verified, 20% | Not verified, 30% | Difference |
|---|---|---|---|
| £950.00 | £190.00 deducted, £760.00 paid | £285.00 deducted, £665.00 paid | £95.00 |
| £3,800.00 (four weeks) | £760.00 deducted, £3,040.00 paid | £1,140.00 deducted, £2,660.00 paid | £380.00 |
The extra deduction isn't lost. Deductions count as advance payments towards your tax and National Insurance, and you can claim back any overpayment through Self Assessment. But you'd be waiting months for money that should have been in your hands. Use the CIS calculator to see the effect on your own invoice.
What to do before your first job
- Register for CIS first if you haven't. See how to register as a CIS subcontractor.
- Write down the details you registered with: legal or trading name, UTR and, for a sole trader, National Insurance number.
- Give the contractor exactly those details in writing, and put your UTR on your invoice if they ask for it.
- Check your first payment and deduction statement. The rate shown tells you the result of the verification.
If you've been charged 30% by mistake
Start by checking the details the contractor holds against your registration, and ask them to re-verify you. Each month, the contractor must give you a payment and deduction statement within 14 days of the end of the tax month, showing what they paid you and the deductions they took. Keep every one. See CIS payment and deduction statements. If a higher rate was taken wrongly and can't be fixed, you can still recover the tax when you file your return. Our guide to claiming back CIS deductions explains how.
This page is general information based on GOV.UK, not tax advice. For your own case, check GOV.UK or ask an accountant.
Frequently asked questions
What is CIS verification?
It's the check a contractor makes with HMRC before paying a subcontractor. HMRC tells them whether you're registered and what deduction rate to use.
Who does the CIS verification, me or the contractor?
The contractor. You just need to give them the exact UTR and name you registered with, so their details match HMRC's.
Why was 30% taken from my pay?
Either you aren't registered for CIS or the contractor couldn't verify you with HMRC. GOV.UK says a higher rate of 30% applies if either is true.
Do I get verified every time I work for a contractor?
Not every payment. Contractors must verify new subcontractors, and anyone not included on a CIS return in the current or last two tax years.
Can I get the extra 30% back?
Deductions count as advance payments towards your tax and National Insurance. You report them in your Self Assessment, and HMRC refunds anything you've overpaid.
Sources
- What you must do as a CIS contractor: verify subcontractors – GOV.UK
- What you must do as a CIS subcontractor – GOV.UK
- What you must do as a CIS contractor: make deductions and pay subcontractors – GOV.UK
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.