Why am i paying 30% tax self employed

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If 30% is being deducted from your wages, it is because you are not “verified” with HMRC. This usually means you haven’t registered for the Construction Industry Scheme (CIS). Because you aren’t in the system, the taxman forces your contractor to take a higher rate of tax as a precaution.

Here is exactly how it works, why it happens, and how to get that money back.

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The Two Rates: 20% vs 30%

In the UK building trade, most self-employed subcontractors (electricians, brickies, carpenters, etc.) have tax taken off their pay before they receive it. This is basically an advance payment on your yearly tax bill.

There are two rates:

1. The Standard Rate (20%): This is for people who are registered with HMRC.
2. The Higher Rate (30%): This is for people HMRC doesn’t know about yet.

If you are seeing 30% disappear from your pay packet, you are currently stuck on the Higher Rate.

Why am I being charged 30%?

Think of the extra 10% as a “stranger penalty.”

When a contractor hires you, they have to call HMRC and ask: “I’m about to pay [Your Name], are they in your system?”

• If HMRC says “Yes”: The contractor deducts 20%.
• If HMRC says “No”: They tell the contractor to deduct 30%.

They do this to stop people from working for cash, disappearing, and never paying their tax. By taking 30% upfront, HMRC ensures they get their money no matter what.

Is that money lost forever?

No. This is the most important thing to understand.

That 30% hasn’t been stolen; it has been sent to HMRC and put into a virtual pot with your National Insurance number on it.

When you file your Self Assessment tax return next year, HMRC will look at the total you earned vs. the huge 30% chunk you already paid. If you paid too much, they will send you a refund for the difference.

How to stop the 30% deduction (Right Now)

You cannot change the past payments, but you can fix future ones instantly.

1. Find your UTR Number: This is your 10-digit Unique Taxpayer Reference.
2. Register for CIS: Go to the GOV.UK website and search “Register for CIS online“. It takes about 10 minutes.
3. Tell your Contractor: Once you are registered, give your contractor your UTR and tell them: “I am now registered for CIS, please verify me again.”
4. The Result: The contractor checks with HMRC, sees you are now “verified,” and drops your deduction to 20% immediately.

Can I get 0% deducted?

If you run a larger business and have a clean history of paying your taxes on time for 12 months, you can apply for “Gross Payment Status.”

This means the contractor pays you the full amount (0% deduction). However, you aren’t tax-free—you just have to save the money yourself and pay it in a lump sum at the end of the year.

Summary

• 30% Deduction = You are unregistered (a “ghost” to HMRC).
• 20% Deduction = You are registered.
• The money isn’t lost = You will likely get a big tax refund at the end of the year.

Next Step for you: If you are paying 30% go to GOV.UK to register for CIS immediately. It is the quickest way to put 10% of your earnings back in your pocket next week.

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