Best Business Loans for Construction / Guides / How CIS affects construction finance
Guide · reviewed 11 November 2026
How CIS affects construction finance
Answer in brief
Under the Construction Industry Scheme, contractors deduct 20% from registered subcontractors' payments, or 30% if unregistered, and pass it to HMRC. That reduces your cash until it's offset against tax. Gross payment status removes deductions, which improves cash flow and makes you more attractive to lenders.
Why lenders care
CIS deductions reduce the cash you receive, so lenders look at your net receipts. Gross payment status shows HMRC trusts your compliance and turnover.
Getting gross payment status
HMRC sets business, turnover and compliance tests. See GOV.UK's CIS guidance.
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