Yes, some mortgage lenders may assess a CIS subcontractor using the gross income shown on their CIS payment statements.
This can produce a very different result from a conventional self-employed assessment based on taxable profit.
A subcontractor might receive £55,000 before CIS deductions but report a lower taxable profit after allowable business expenses. A lender using the CIS payment history may begin with the higher gross figure, while a lender assessing the applicant as an ordinary sole trader may use the lower net profit from their tax return.
However, there is no separate official mortgage product called a “CIS mortgage”. It is normally a standard residential mortgage where the lender has criteria allowing qualifying CIS income to be assessed in a particular way.
The key is finding a lender whose treatment of CIS income matches the applicant's working arrangements and documentation. FG & Cook's specialist mortgage advisers can review the payment history, tax status and supporting evidence before an application is submitted.
What is the Construction Industry Scheme?
The Construction Industry Scheme, usually shortened to CIS, is an HMRC scheme governing how contractors pay subcontractors for construction work.
Under CIS, the contractor normally deducts money from the subcontractor's payment and sends it to HMRC. Those deductions count as advance payments towards the subcontractor's tax and National Insurance liability.
Registered subcontractors are normally subject to deductions at 20%. A higher 30% rate can apply where the subcontractor is not registered, cannot be verified or has supplied incorrect business details. Some qualifying subcontractors can obtain gross-payment status and receive payments without CIS deductions being made first.
Being paid under CIS does not normally make the subcontractor an employee. The subcontractor is still responsible for filing the appropriate tax return and paying the correct overall tax and National Insurance after accounting for the deductions already made.
What are CIS payslips?
The phrase “CIS payslip” is widely used, but the formal document is usually a CIS payment and deduction statement.
It normally records the contractor's details, the subcontractor's name, the payment period, gross payments, the cost of materials where relevant, the amount subject to CIS deduction and the tax deducted.
Where deductions have been made, the contractor must provide a written payment and deduction statement within 14 days of the end of the relevant tax month.
These statements can help a mortgage lender verify how much the subcontractor earned before the CIS tax deduction. They should normally be supported by bank statements showing that the corresponding net payments were actually received.
Can lenders use gross CIS income rather than taxable profit?
Some can.
This is the main attraction of a CIS-based mortgage assessment. A conventional sole-trader assessment commonly uses net taxable profit after allowable business expenses. A CIS assessment may instead use the gross labour income evidenced by payment statements, subject to the lender's own calculation and deductions.
This does not mean every amount shown on the statement will be accepted. The lender may exclude VAT, materials, reimbursed expenses, non-recurring payments, income that cannot be matched to bank statements, payments outside the accepted history period or work that is no longer continuing.
The broker must therefore establish which figure on the statement represents genuine labour income.
How might a lender calculate CIS income?
There is no universal CIS calculation.
For example, if a subcontractor's statements show a six-month labour total of £27,000, an underwriter using a straightforward annualisation model might establish a baseline gross-income proxy of £54,000 (£27,000 ÷ 6 × 12).
That figure is only an unadjusted starting point for affordability testing. It is not a guaranteed mortgage amount or an automatic entitlement to a fixed income multiple.
Another lender may require a complete 12-month history and total the accepted payments received over that period. A further lender may decline to use CIS statements and assess the applicant through SA302 tax calculations and tax-year overviews instead.
Affordability will still depend on debts, dependants, childcare, maintenance, credit profile, mortgage term, deposit and household expenditure.
Why can CIS income produce a higher affordability figure?
Many subcontractors claim legitimate business expenses before calculating taxable profit. These might include tools, protective clothing, travel between jobs, van costs, insurance, accountancy fees, telephone costs, training and other allowable expenditure.
Suppose a subcontractor receives £60,000 in gross qualifying CIS labour payments but reports taxable profit of £38,000 after allowable expenses. A lender using the gross CIS figure may assess income from around £60,000, subject to its criteria, while a lender using conventional self-employed accounts may start from £38,000.
That difference could materially affect affordability, but it does not mean the higher figure is automatically appropriate or available from every lender. The lender may still consider whether unavoidable business costs reduce the applicant's real ability to maintain the mortgage.
Is a CIS subcontractor employed or self-employed?
Usually self-employed, although the payment arrangements must be checked carefully.
Some mainstream lenders maintain distinct underwriting frameworks that treat CIS-deduction subcontractors as self-employed. Where a payer instead deducts full PAYE tax and National Insurance, the applicant may fall under an employed or fixed-term-contract assessment. This illustrates lender variation rather than a market-wide rule.
A CIS payment statement is not the same as an ordinary employee payslip. A CIS subcontractor will not necessarily receive paid annual leave, sick pay, employer pension contributions, guaranteed ongoing work, redundancy rights or a fixed annual salary.
Important notice: FG & Cook Financial Services Limited provides residential mortgage advice and does not give tax, accounting, employment-status or construction-compliance determinations. The 20% CIS deduction is an advance payment towards tax liability, not a final settlement. Final year-end calculations and Self Assessment returns should be discussed with HMRC or an appropriately qualified accountant or tax adviser.
How much CIS history will a lender want?
This varies.
Some lenders may look for around 12 months of CIS payment history. Others may accept a shorter period where the applicant has a strong track record in the same occupation, while some may require conventional self-employed evidence covering two years.
There is no reliable market-wide rule that every CIS applicant needs exactly three, six or 12 months.
A lender may consider total time working in construction, time registered under CIS, continuity of work, occupation, length of time with the current contractor, previous employed experience, recent payment levels, gaps between jobs and whether tax returns have been submitted.
An experienced bricklayer who recently moved from PAYE employment to CIS subcontracting may present differently from someone who has just entered the construction industry.
What if you work for several contractors?
This is common and does not automatically prevent a mortgage.
A subcontractor may move between construction sites or receive payments from several main contractors during the year. The lender may ask for CIS statements and bank evidence covering each payer.
Several income sources can demonstrate a broad customer base and reduce reliance on one contractor. However, inconsistent records, unexplained transfers or missing statements can make the income harder to verify.
The broker will need to establish whether the work is continuous, whether the payments relate to the same occupation, whether any income overlaps, whether any contractor has stopped using the applicant and whether the most recent income remains representative.
What if there are gaps between CIS jobs?
Gaps are not necessarily unusual in construction, but they can affect the lender's view of sustainability.
A lender may look at how long each gap lasted, whether the break was voluntary, seasonal conditions, illness or injury, time spent waiting for another site, the wider work history and how quickly income resumed.
A short break between projects may be acceptable. Repeated or prolonged periods without income may make it harder for the lender to annualise recent earnings confidently.
Using a particularly strong three-month period without explaining a quieter preceding period could also produce an unrealistic picture of annual income.
What if the amount changes every month?
Variable CIS earnings are normal. Site availability, working days, overtime, weather and project stages can all change the monthly figure.
The lender may total the accepted period, calculate an average or use a lower figure where recent income has fallen.
For example, a subcontractor whose monthly income has reduced from £5,000 to £3,000 may not be assessed simply on the earlier higher average without further explanation. The latest statements and bank activity need to support the income being used.
Does the 20% CIS deduction reduce the mortgage income?
Not necessarily.
The 20% deduction is normally an advance payment towards tax and National Insurance rather than a reduction in the underlying gross labour income. A lender using CIS gross income may therefore start with the amount before the deduction.
However, the gross figure should not be confused with personal take-home income. The subcontractor may still have further tax, National Insurance, business expenses, vehicle costs, insurance, tool replacement, pension contributions and periods without paid work.
The lender's affordability model makes its own deductions and expenditure assumptions.
What if you have gross-payment status?
A subcontractor with gross-payment status receives qualifying CIS payments without the contractor making the standard deduction first.
This can make bank deposits appear higher, but it does not remove tax obligations. The applicant remains responsible for calculating and paying the correct tax and National Insurance through the appropriate process.
Gross-payment status does not automatically mean that every lender will switch entirely to SA302-based assessment. Some may still consider invoices, remittance advice and bank statements, while others may prefer conventional accounts and tax documents because the usual deduction statements are absent.
The practical point is that the evidence route may change. Gross-payment status is not automatically better or worse for mortgage eligibility.
Can a limited company be paid through CIS?
Yes. CIS can apply to subcontractors operating as sole traders, partnerships or limited companies.
However, mortgage treatment may differ. Where the applicant works through a limited company, some lenders may consider CIS payment evidence, while others may assess the applicant as a company director using salary and dividends or company profit.
The lender may ask who holds the CIS registration, whether payments are made to the individual or company, the applicant's shareholding, salary and dividends, company accounts, business bank statements, corporation-tax liabilities and whether other people work through the company.
A limited-company subcontractor should not assume that criteria designed for an individual sole trader will apply automatically.
What documents are normally required?
A lender using CIS income may ask for CIS payment and deduction statements, personal and business bank statements, evidence of current work, contracts or subcontractor agreements, invoices, a UTR, proof of CIS registration, SA302 tax calculations, tax-year overviews, proof of deposit and standard identification documents.
The statements should match income appearing in the bank account. Where the gross amount includes materials, the lender may need a clear breakdown showing the labour element.
HMRC tax documents may still be requested even where affordability is based mainly on CIS earnings.
What if some CIS statements are missing?
Missing statements can cause difficulty because the lender may be unable to verify the full income history.
The first step is to ask the contractor or payroll provider for copies. Bank statements alone may not show gross income, materials, CIS deductions, the tax rate applied or which contractor made the payment.
An accountant may help reconcile the records, but they should not create or estimate income that cannot be properly evidenced.
What can reduce the income a lender accepts?
A lender may reduce or reject part of the claimed income where statements do not match bank credits, materials are included in the gross figure, income has recently fallen, the working history is too short, gaps are long or unexplained, the applicant has changed occupation, payments are unclear, income has not been declared, the contractor relationship has ended or tax records are inconsistent.
A recent increase may also be treated cautiously. If earnings rose sharply because the applicant completed unusually high overtime on one project, the lender may not assume that level will continue indefinitely.
Will you need a larger deposit?
Not necessarily.
Some lenders that accept CIS income offer ordinary residential mortgage products, subject to normal affordability, credit and loan-to-value rules. Others may impose stricter requirements depending on the length of history, credit profile, property type, age, residency status, loan amount, evidence quality or need for specialist underwriting.
Being paid under CIS does not automatically mean a specialist interest rate or a large deposit. Equally, a substantial deposit will not overcome a lender's minimum-history or documentation rules.
The correct approach is to compare lenders that accept the income properly rather than select the lowest advertised rate before checking the criteria.
Can you get a CIS mortgage with adverse credit?
Potentially, although options may be narrower and the overall cost could be higher.
The lender will consider both the income evidence and the credit history. Relevant issues may include missed payments, defaults, County Court judgments, debt-management arrangements, Individual Voluntary Arrangements, bankruptcy and current unsecured borrowing.
CIS income does not remove normal credit underwriting. A lender willing to use gross payment statements may still decline the application because of recent or severe credit problems.
Common mistakes we frequently see
One common mistake is assuming every lender will use gross CIS earnings. Many will still assess the applicant through conventional self-employed accounts and tax returns.
Another is submitting only the net amount paid into the bank without the corresponding payment and deduction statement. The lender may need both to understand the gross income and deductions.
Subcontractors also sometimes include materials, VAT or reimbursed expenses as though they were personal earnings. A further mistake is applying before collecting a complete and consistent history, because missing months and unexplained gaps can delay an otherwise workable case.
Perhaps the biggest mistake is referring to CIS payment statements as ordinary employee payslips and applying to a lender whose system treats the applicant as PAYE employed.
How can FG & Cook help?
A CIS mortgage application is not only about proving that deductions appear on a payment statement.
The broker needs to establish whether the applicant is an individual or limited company, how long they have worked under CIS, which part of the payment represents labour, whether the income is stable, whether gross CIS or taxable profit produces the stronger assessment and which lenders accept the available evidence.
FG & Cook's specialist lending advisers can review the statements, bank deposits, working history and current lender criteria before an application is submitted.
The aim is to use an income figure that is properly evidenced, sustainable and acceptable to the lender—not simply the largest total appearing on the paperwork.
Subcontractors purchasing a property should also retain a sensible contingency for legal costs, surveys and repairs. Variable construction income can make an unexpected property defect particularly difficult to absorb, so mortgage affordability should not be treated as the full purchase budget.
You can also explore our wider mortgage services or contact FG & Cook to discuss your position.
FG & Cook Financial Services Limited is an Appointed Representative of OSL Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority under Firm Reference Number 948512.
Your home may be repossessed if you do not keep up repayments on your mortgage.
This article is intended for general information only and does not constitute personalised mortgage, tax, accountancy, employment-status or legal advice. Lender criteria and individual underwriting decisions vary.