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Business · CIS

CIS Deduction Calculator

Under the Construction Industry Scheme, contractors deduct tax from subcontractor payments before paying out. 20% if you’re registered, 30% if you’re not.

£
£

Net paid to you

£2400.00

Breakdown

  • Labour
    £2,000
  • Materials
    £800
  • Invoice total
    £2,800
  • CIS @ 20% on labour
    −£400
  • Net payment
    £2,400

How we calculated your result

CIS is deducted on the labour element only — materials, plant hire, fuel and VAT are excluded. Registered subcontractors are taxed at 20%; unregistered at 30%. Gross-status subcontractors get nothing deducted.

Official UK rules in simple English

  • Applies to mainstream construction work in the UK.
  • Contractor files a monthly CIS return (CIS300).
  • Subcontractor reclaims deductions via Self Assessment / Corporation Tax return.
  • Gross payment status requires turnover >£30k and a clean tax record.

Common pitfalls to watch out for

  • ⚠ Materials must be itemised

    If not separated on the invoice, HMRC may treat the whole figure as labour.

  • ⚠ VAT reverse charge

    Since 2021, B2B construction services use the VAT reverse charge — recipient accounts for VAT.

  • ⚠ Penalties for late returns

    £100 per missed monthly CIS return, escalating fast.

Frequently asked questions

Do I have to register?
If you’re a subcontractor in construction, yes — to avoid the 30% rate.
Can I claim materials VAT?
Yes if VAT-registered, via your normal VAT return.

Educational. Always file CIS returns through HMRC’s online service or commercial software.

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