You must verify a subcontractor with HMRC before their first payment. Here's what verification involves and what it tells you about the deduction rate.
14 June 2026
Before you pay a new subcontractor for the first time under CIS, there's a step you can't skip: verifying them with HMRC. It's what tells you which deduction rate to apply, and skipping it doesn't just risk a wrong deduction, it defaults you straight to the highest rate.
Verifying a subcontractor means checking with HMRC whether they're registered under CIS, and if so, at what status. HMRC's response confirms whether the subcontractor should be paid gross (0% deducted), at the standard net rate (20% deducted), or whether they can't be verified, in which case you must deduct at 30%.
Contractors are required to verify a subcontractor before making the first payment to them. You don't need to re-verify a subcontractor you've already paid within the current tax year if HMRC has previously confirmed their details and nothing has changed, but a new subcontractor, or one you haven't paid in a while, needs to go through verification again.
To verify a subcontractor, you'll typically need:
Have these ready before you try to verify, since incomplete or mismatched details are the most common reason a verification fails or comes back as "unable to verify."
You can verify a subcontractor through the CIS online service, either directly through your HMRC account or through commercial CIS or payroll software that connects to the same verification process. Once submitted, HMRC returns a verification reference number and tells you the rate to apply. Keep that reference: it's part of what you need on record for your CIS300 return and your Payment and Deduction Statements.
The verification result maps directly onto the three CIS deduction rates:
If a subcontractor's details don't match what HMRC holds, for example a UTR that's slightly wrong or a name that doesn't match their registration exactly, verification can fail even if they are genuinely CIS-registered. It's worth double-checking the details with the subcontractor directly rather than assuming the 30% rate is simply "their rate."
If you pay a subcontractor without verifying them first, HMRC's default position is that you should have deducted at 30%, the rate for unverified subcontractors. If it later turns out a lower rate should have applied, correcting that after the fact is more admin than simply verifying up front, and in the meantime you've either over-deducted from the subcontractor or under-deducted and left yourself exposed.
For subcontractors you use regularly, it's worth keeping a running note of their verification reference and status alongside their UTR, so you're not re-checking from scratch every time you bring them onto a job. Just be aware that status can change: a subcontractor might gain gross payment status partway through the year, or lose it if their compliance record slips, so don't treat last year's verification as permanent.
Once you've verified a subcontractor and know their rate, that status feeds directly into the CIS300 monthly return and the statement you owe them. If you're managing a list of subcontractors on different statuses, our CIS statement generator lets you record each one's verified status against their payments and applies the correct rate automatically, rather than you tracking it rate by rate in a spreadsheet.
If you're dealing with subcontractor payments exported from job-management software like QuickBooks, you can bring those payment details in alongside the verification status you've already recorded.
For more on getting CIS right from the start, see our guides hub.