Subcontractor costs

Yes

Payments to subcontractors for work on your jobs are fully deductible as a business expense. If you are in the Construction Industry Scheme (CIS), you must deduct the appropriate tax from payments to unregistered subcontractors and pay it to HMRC.

Key thresholds

CIS deduction rates: 20% for registered subcontractors, 30% for unregistered, 0% for gross payment status.

Common questions

Can I claim the cost of paying a subcontractor to help with a job?

Yes. Subcontractor payments are a business expense. If you are the contractor under CIS, you must also handle the CIS deduction.

Do I need to register for CIS if I use subcontractors?

If you pay subcontractors for construction work, you must register as a contractor under CIS and make deductions. Check HMRC's CIS guidance.

Watch out for

—Payments to genuine employees go through PAYE, not CIS. The distinction between employee and subcontractor is critical.

—If HMRC reclassifies a subcontractor as an employee, you become liable for unpaid PAYE and National Insurance.

CIS rules are complex. If you pay subcontractors regularly, take advice on registration and deduction obligations.

HMRC sources

https://www.gov.uk/what-is-the-construction-industry-scheme https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor

Last verified: May 2026 · Tax year 2026/27

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This guidance is for general information only. Tax rules change. Verify with HMRC or a qualified accountant before filing.