CIS Tax Calculator

The Construction Industry Scheme is how HMRC collects tax from subcontractors in construction. The contractor paying you takes a slice off the labour part of your invoice and hands it to HMRC on your behalf, then gives you a monthly statement showing what was deducted. This calculator does the same sum the contractor's payroll does: it splits your invoice into labour and materials, applies the rate that matches your CIS status, and shows what should actually land in your bank.

• Materials are taken out of the calculation first. CIS is only deducted from the labour element, plus anything treated as labour such as some plant hire without an operator.
• The rate applied depends on your status with HMRC: 20% if you are registered under CIS, 30% if you are not registered or cannot be verified, and 0% if you hold gross payment status.
• The deduction is taken from the labour figure and paid to HMRC. Your net payment is the labour after deduction, plus the materials in full.
• VAT sits outside the CIS sum. Since March 2021 most construction supplies between VAT-registered businesses fall under the domestic reverse charge, so the contractor accounts for the VAT rather than paying it to you.

1. Enter the labour value on the invoice, excluding VAT.
2. Enter the materials you are charging on, again excluding VAT. Leave it at zero for a labour-only job.
3. Choose your CIS status: registered at 20%, unregistered at 30%, or gross payment status at 0%.
4. Read the deduction and the net payment, and check them against the CIS statement when it arrives.

A registered bricklaying subcontractor invoices a main contractor 4,000 for labour and 1,200 for materials on a school extension.

• Invoice total before VAT: 4,000 + 1,200 = 5,200.
• Deduction applies to labour only: 4,000 x 20% = 800.
• Labour after deduction: 4,000 - 800 = 3,200.
• Net payment: 3,200 + 1,200 = 4,400.

The subcontractor receives 4,400 and HMRC receives 800, which is set against the subcontractor's own tax bill. Had the same firm not been registered, the deduction would have been 1,200 at 30% and the payment 4,000.

The deduction is not an extra tax. It is money paid towards your own liability, so it comes off what you owe at the end of the year and can leave you due a refund if too much was taken. What it does change is cash flow, because you are financing part of your tax bill months before it is due. Keep every monthly statement, because that is the evidence HMRC and your accountant work from, and check the labour and materials split on each one against your invoice.

Registering under CIS moves you from 30% to 20% straight away, which on a 4,000 labour invoice is 400 back in your account that month. Getting the split wrong matters too: charging materials as labour hands HMRC a deduction on money that was never your income, and a contractor who cannot verify you will deduct at the higher rate whatever you invoice. On public sector work, where main contractors run long payment chains, that difference compounds across every application for payment.

How much is deducted under CIS?

20% for subcontractors registered under the scheme, 30% where the subcontractor is not registered or HMRC cannot verify them, and nothing at all for those with gross payment status.

Is CIS deducted from materials?

No. The deduction applies to labour and certain labour-related costs. Materials you supply are paid in full, provided the invoice separates them out clearly.

Do I include VAT before working out the deduction?

No. CIS is calculated on the value excluding VAT. Most construction work between VAT-registered businesses also falls under the domestic reverse charge, so the contractor handles the VAT.

Can I get a CIS deduction back?

Deductions count towards your tax bill. If they add up to more than you owe, the balance is repayable. Limited companies usually offset it against PAYE, and sole traders claim it on the self assessment return.

How do I get the 20% rate instead of 30%?

Register as a subcontractor with HMRC and give the contractor the exact business name, unique taxpayer reference and national insurance or company number they need for verification.