Self-Employment
CIS for Self-Employed Electricians: How It Works
Understand when CIS applies to electricians, the 20% and 30% deduction rates, gross payment status, what goes on your tax return and how CIS refunds work.
Example CIS payment statement
Electrical subcontractor
Payment
CIS calculation
Simplified example for illustration only. VAT and other qualifying costs may be treated separately.
Quick Facts
Scheme
CIS
Registered
20%
Unregistered
30%
Gross status
0% deduction
Tax route
Self Assessment
Worth knowing: CIS deductions are advance payments towards your tax and National Insurance bill. They are not a final 20% tax rate, and being registered for CIS does not by itself make you self-employed.
01
What is CIS?
The Construction Industry Scheme is the HMRC system that controls how certain payments from construction contractors to subcontractors are handled for tax. It is common across construction, including a lot of electrical subcontracting.
If you are working under CIS, the contractor normally verifies your details with HMRC before paying you. HMRC tells the contractor whether to make a 20% deduction, a 30% deduction or pay you gross.
The money deducted is sent to HMRC as an advance payment towards your eventual tax and National Insurance liability. You still have to keep proper business records and deal with your tax return.
CIS changes how you are paid — not your final tax bill
A 20% deduction does not mean your final tax liability is 20% of your turnover. Your final position is worked out using your business income, allowable expenses, tax rules and the CIS deductions already paid over to HMRC.
02
Does CIS apply to electricians?
Often — but not simply because you call yourself a self-employed electrician. CIS applies when the contractual arrangement and the work fall within the Construction Industry Scheme.
Commonly within CIS
Building electrical systems
HMRC specifically includes installation in a building or structure of systems such as lighting and power supply. Wider construction work including alterations, repairs and extensions can also be construction operations.
Check the exact work
Not every electrical job is automatically CIS
HMRC distinguishes installation of complete building-service systems from some repair, servicing, maintenance or extension work. Security-only systems can also be excluded. The wording and scope of the contract matter.
Mixed contracts can change the answer
A contract covering construction operations as well as other work can bring the payment within CIS. If you are unsure whether a particular electrical contract is inside the scheme, check HMRC's CIS340 guidance or speak to an accountant.
03
CIS deduction rates explained
Your contractor does not choose whatever percentage they want. They verify you with HMRC and use the payment status HMRC returns.
The standard deduction rate when HMRC can verify you as a CIS-registered subcontractor.
The higher rate can apply if you are not registered, HMRC cannot verify you, or the details supplied do not match.
No CIS deduction is taken. You receive the payment gross and remain responsible for paying the tax and National Insurance due.
Gross payment status is not automatic
HMRC currently applies business, compliance and turnover tests. For a sole trader, the turnover test is at least £30,000 over the previous 12 months after excluding VAT and materials. Partnerships and companies have additional tests.
04
How are CIS deductions calculated?
One of the most common mistakes is assuming a contractor simply takes 20% from the whole invoice. HMRC's calculation removes certain amounts before applying the CIS rate.
Simplified electrician example
What may be taken out first?
- VAT
- Materials you paid for directly
- Plant hired for the job
- Consumable stores
- Certain fuel used for the work
- Manufacturing or prefabrication costs
Keep evidence for materials you bought directly. HMRC says the contractor may ask for receipts and can estimate the material cost if evidence is not available.
05
How do electricians register for CIS?
If you are genuinely self-employed and working as a subcontractor on qualifying construction work, registration normally prevents the higher 30% deduction rate.
You need a Unique Taxpayer Reference (UTR). If you are starting a new business without one, HMRC's registration journey can register you for Self Assessment and CIS together.
HMRC says the quickest route is online. Standard registration gives you net payment status, meaning deductions are normally made at 20%.
Give the legal or trading name used for CIS registration and your UTR. Sole traders may also need their National Insurance number when the contractor verifies them.
When deductions are made, the contractor should provide a statement showing payments and deductions. You will need these figures for your records and tax position.
06
CIS tax returns, refunds and what electricians actually declare
This is the part that catches people out. CIS deductions do not replace your tax return. If you are a sole trader or partner, you still report your business through Self Assessment and HMRC uses the CIS already deducted as credit against the final bill.
Do not put only the money that reached your bank account on the return
HMRC says sole traders and partners should record the full amounts on their invoices as income and separately enter the CIS deductions made by contractors in the CIS deductions field.
Step 1
Declare full turnover
Include your full business income before CIS deductions, not just your take-home payments.
Step 2
Enter CIS suffered
Use your contractor statements to enter the deductions already paid over to HMRC.
Step 3
HMRC reconciles the bill
CIS credit is offset against tax and National Insurance. You pay any shortfall or receive a refund if too much was deducted.
Example: why a CIS refund can happen
Imagine contractors deducted CIS throughout the year based on your labour payments. Your final tax calculation then takes account of your actual business profit after allowable expenses and the tax rules that apply to you. If the CIS already deducted is more than the final amount due, the excess can be repaid. If it is less, you pay the difference.
Your CIS statement is not the same as your tax return
Keep your invoices, expenses and CIS statements together. A contractor's deduction statement tells you what was deducted; your Self Assessment works out your actual annual tax position.
Sole traders and partners
Report the business through Self Assessment. The normal online filing and payment deadline is 31 January following the end of the relevant tax year.
Limited companies
The process is different. HMRC says CIS deductions suffered by a company are normally claimed through the company's PAYE payroll using an Employer Payment Summary rather than simply claimed on the Corporation Tax return.
2026: Making Tax Digital may apply
From 6 April 2026, sole traders and landlords with qualifying annual income from self-employment and property over £50,000 must use Making Tax Digital for Income Tax. The threshold falls to over £30,000 from April 2027 and over £20,000 from April 2028. If this applies to you, you will need compatible software and digital records.
07
What expenses can a self-employed electrician claim?
Allowable business expenses can reduce the profit on which your Income Tax is worked out. For electricians, that can include everyday trade costs as well as some larger equipment and vehicle costs. You can normally claim only the business part of a cost, and the exact tax treatment depends on what you bought and the accounting method you use.
Tools & test equipment
Trade tools, testers, drills, machinery and other equipment used for the business can qualify. Under cash basis, most equipment other than cars is normally treated as an allowable expense; traditional accounting may use capital allowances instead.
Protective workwear
Uniforms and protective clothing needed for the work can qualify, including genuine PPE. Ordinary everyday clothing is not allowable just because you wear it on site.
Van & business travel
Qualifying vehicle and travel costs can include fuel, insurance, repairs, servicing, parking, train fares and other business travel. Personal travel is not allowable. Simplified mileage may be used where eligible.
Phone & internet
You can claim the business proportion of phone and internet costs. If a bill is partly personal, only the part that relates to the business is allowable.
Insurance & finance costs
Qualifying business insurance, bank charges, business-loan interest and similar financial costs can be allowable when they relate to the business.
Training & refresher courses
Training that improves or updates skills and knowledge you already use in the electrical business can qualify. Training to start a completely new, unrelated business normally does not.
Advertising & website costs
Advertising, marketing and website costs for your electrical business can normally be claimed as allowable business expenses.
Working from home
If you do paperwork, quotes or business admin from home, you may be able to claim a reasonable business proportion of household costs or use HMRC's simplified flat-rate method where eligible.
2026/27 vehicle mileage rates
For the 2026/27 tax year, HMRC's simplified-expenses rate for eligible cars and goods vehicles is 55p per business mile for the first 10,000 miles, then 25p per mile. Once you use the flat-rate method for a vehicle, HMRC generally requires you to continue using it for that vehicle while it remains in the business.
You do not get the full expense back as a CIS refund
Allowable expenses generally reduce your taxable business profit. HMRC then works out the tax and National Insurance due and credits the CIS already deducted. If those CIS deductions are greater than the final liability, the excess can be repaid.
08
CIS does not decide whether you are self-employed
Being paid through CIS, having a UTR or holding gross payment status does not prove that you are self-employed. Employment status is a separate question based on the real working arrangement.
A genuine subcontractor
CIS can apply where the relationship is genuinely one of self-employment and the contract covers qualifying construction operations.
If you are really an employee
PAYE should be used instead. A contractor cannot make an employment relationship self-employed simply by paying someone under CIS.
If your working arrangement is unclear, use HMRC's employment-status guidance or get professional advice. This is particularly important where one contractor controls your hours, work, supervision and working arrangements.
09
What records should a CIS electrician keep?
Good records make tax returns and CIS refunds far easier. Do not wait until January to reconstruct a year's worth of payments from your bank account.
How long should a self-employed electrician keep records?
HMRC says self-employed business records normally need to be kept for at least 5 years after the 31 January submission deadline for the relevant tax year. Other rules can apply to late returns or enquiries.
10
Frequently asked questions
What does CIS mean for an electrician?
CIS stands for the Construction Industry Scheme. If you are genuinely self-employed and carrying out construction work for a contractor, the contractor may need to verify you with HMRC and deduct CIS from the part of your payment that is subject to the scheme.
Is CIS tax always 20%?
No. Registered subcontractors are normally deducted at 20%, unregistered or unverifiable subcontractors can be deducted at 30%, and approved gross-payment-status subcontractors are paid without CIS deductions. CIS is an advance payment towards tax and National Insurance, not your final tax rate.
Do I put the full invoice amount on my tax return?
If you are a sole trader or partner, HMRC says you should record the full amounts on your invoices as income and separately enter the CIS deductions contractors have made. Do not report only the net amount that reached your bank account.
Can I get CIS tax back?
Possibly. For sole traders and partners, HMRC offsets CIS deductions against the tax and National Insurance due through Self Assessment. If the deductions are more than the final liability, HMRC can repay the excess. Limited companies use a different process through PAYE.
Does having a UTR mean I am CIS registered?
No. A UTR identifies you for tax, but CIS registration is a separate step. If you are not already registered, the quickest route is normally HMRC's online CIS registration service.
Does CIS prove I am self-employed?
No. CIS registration, a UTR or gross payment status does not decide employment status. The real working arrangement must still be genuinely self-employed. If the relationship is employment, PAYE rules apply instead.
Does CIS apply to all electrical work?
No. CIS covers qualifying construction operations. Installation of building lighting and power-supply systems is specifically within scope, but some repair, maintenance and extension work can fall outside the 'installation of systems' rule. Mixed construction contracts can also change the position, so the actual contract and work matter.
What happens if I lose a CIS deduction statement?
Ask the contractor for a replacement. HMRC says contractors can issue duplicate statements. Keep these statements because they are important evidence of deductions made from your payments.
Source and accuracy
CIS rules, tax thresholds and reporting requirements can change. This guide was reviewed against current HMRC and GOV.UK guidance on 13 August 2026. It is general information, not individual tax advice. Check HMRC guidance or use a qualified accountant for your own circumstances.
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