CIS income gross-up explained
CIS-friendly lenders assess you on your gross posted income — the figure before the 20% deduction at source — rather than the net profit on your tax return. That ‘gross-up’ usually supports a noticeably larger mortgage, because it values your work before tax rather than the reduced profit left after it.
What ‘gross-up’ means
Under the Construction Industry Scheme your contractor deducts tax at source — 20% if registered — and pays it to HMRC. CIS-aware lenders take your gross payslip figure (before that deduction) and average recent months to estimate annual income, rather than using the lower net-profit figure from self-assessment.
It’s a more accurate picture of what you earn, and it usually means more borrowing.
Gross vs net in numbers
The gross-up effect
Net profit on self-assessment: £38,000
Assessed on net profit (4.5×): ≈ £171,000
Assessed on gross posted income (4.5×): ≈ £270,000
Same work — assessed on gross posted income, the borrowing rises substantially.
What you’ll need
- Three to six months of CIS payslips or statements.
- Personal bank statements.
- Proof of CIS registration where applicable.
- Gross-up uses income before the 20% deduction.
- It typically beats a net-profit assessment.
- A few months’ payslips can be enough — full accounts aren’t always needed.
- Placement with a CIS-friendly lender is key.
Evidencing it properly
CIS cases turn on paperwork more than most. What lenders want is a run of CIS statements or payslips showing the gross figure and the deduction, matched against bank statements showing the net amounts arriving. Where the two reconcile cleanly, the gross-up is straightforward; where they do not, the case stalls.
Keep the statements. Subcontractors frequently discard them because the tax has already been handled, then find at application that the evidence for a much larger borrowing figure is missing. If yours are incomplete, the contractor who paid you can normally reissue them — start that early rather than at submission.
Where the deduction rate matters
Registration status changes the deduction — registered subcontractors have less withheld than unregistered ones. That does not change your gross income, and therefore should not change the assessment, but it does change what arrives in the bank and how the reconciliation looks.
Some subcontractors also hold gross payment status, receiving the full amount without deduction. That case is assessed differently again, and can look closer to a straightforward self-employed application. Establishing which of the three applies to you is the first question, because it determines which lenders and which basis are in play.
CIS, answered
Why is gross income better than my tax return?+
Your tax return shows net profit after expenses, which understates your earning power. Gross posted income — before the 20% deduction — is higher and gives a fairer basis for borrowing.
Do I need full accounts as a CIS worker?+
Often not. Many CIS-friendly lenders average recent payslips instead of requiring two or three years of finalised accounts, which helps if you’re newly subcontracting.
What if I’m not CIS-registered?+
Unregistered subcontractors have 30% deducted rather than 20%, and the lender pool is smaller. Registering generally improves both your take-home and your mortgage options.
What if my CIS statements are missing?+
Ask the contractor who paid you to reissue them — they are required to provide the information and can normally produce duplicates. Bank statements alone show the net amounts arriving, which is precisely the figure that understates you, so without the statements you may be assessed on the smaller number. Start collecting them well before applying.