CIS deduction finance
Construction Industry Scheme deductions are a working-capital headache for limited company subcontractors. 20 to 30% of every contractor payment is withheld and sits with HMRC until the annual return reconciles. CIS deduction finance advances that withheld balance now, repaid against the eventual HMRC refund. UK specialist lenders typically advance 70 to 90% of the verified balance with decision in 24 to 72 hours.
When this matters
- You are a verified CIS subcontractor (20% deduction rate) with 6+ months of consistent deductions
- Your accountant has confirmed the deduction balance is correct and a refund is expected on the next CT600 / SA tax return
- Cash is tight because deductions plus VAT are stripping more than the trading margin recovers in the same month
- You have not yet applied for Gross Payment Status, or are waiting on the GPS decision
When this is the wrong route
- You already hold Gross Payment Status (no deductions to advance against)
- The deduction balance is small (under £5k) and the arrangement fee makes it uneconomic
- You have material HMRC arrears on PAYE or VAT that will offset any CT refund
FAQs
What is CIS deduction finance?
Construction Industry Scheme deductions are amounts withheld by main contractors from subcontractor payments (typically 20% for verified subbies, 30% for unverified) and paid to HMRC against the subcontractor's eventual tax liability. CIS deduction finance advances those withheld amounts so the subcontractor has working capital now, rather than waiting until the next tax return reconciliation.
Which subcontractor businesses qualify?
Limited company subcontractors registered for CIS, with at least 6 months of CIS deductions visible from one or more main contractors. The lender wants to see a consistent pattern of deductions, not a one-off project. Sole traders are out of scope for FundBiz; we route limited companies, LLPs, and partnerships of 4+ only.
How much can I borrow against CIS deductions?
Typically 70% to 90% of the verified deduction balance. So if £40k has been withheld over the last 6 months, an advance of £28k to £36k is realistic. The lender keeps the rest as cover for HMRC offsets that might come out of the eventual return.
How is CIS deduction finance repaid?
Three common shapes: (1) lump sum repayment on receipt of the HMRC tax-return refund, (2) monthly amortisation across 6 to 12 months, (3) hybrid where the HMRC refund clears a chunk and the rest is amortised. The lender will usually take a charge over the CT600 refund to secure repayment.
Will this affect my Gross Payment Status (GPS) application?
No. CIS deduction finance is a lending product against amounts HMRC already holds; it does not change your CIS status with HMRC. GPS applications are judged on compliance history, turnover thresholds, and business structure, not on whether you finance the withheld amounts.
How long does it take?
Decision in 24 to 72 hours, drawdown in 5 to 10 working days. The lender needs your CIS deduction statements (from your contractor or HMRC online), last filed accounts or management accounts, and bank statements.
To get matched to CIS deduction finance lenders: eligibility checker. Limited companies, LLPs and partnerships of 4+ only.