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CIS deduction calculator

Enter the labour and the materials separately. The deduction comes off the labour only — the part most calculators get wrong by applying the rate to the invoice total.

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Gross payment£1,250.00
Less CIS deduction (20% of labour)− £200.00
Net payment to subcontractor£1,050.00

The contractor pays £200.00to HMRC on the subcontractor’s behalf, and the subcontractor reclaims it through Self Assessment. The £250.00 of materials is paid in full, because CIS never applies to it.

Why the materials split matters

The Construction Industry Scheme takes tax off the labour a subcontractor supplies. It does not touch materials, plant hire or consumables that the subcontractor has paid for and is recharging.

The gap is not small. On a £1,000 labour plus £250 materials invoice, a 20% deduction applied to the whole £1,250 takes £250. Applied correctly to the labour alone it takes £200. That £50 is the subcontractor’s money, sitting with HMRC until the next Self Assessment.

The contractor is entitled to ask for evidence that the materials cost what the invoice says, so itemise them and keep the supplier receipts. Guessing high is not a shortcut; HMRC can and does recover under-deducted tax from the contractor.

The three rates

  • 0% — the subcontractor holds gross payment status. Nothing is deducted, but the payment is still reported on the monthly CIS return.
  • 20% — the standard rate for a subcontractor registered with HMRC under CIS and successfully verified.
  • 30% — the subcontractor is not registered, or verification failed. Verify before you pay: applying 20% to someone who should be at 30% leaves the contractor liable for the difference.

What you owe the subcontractor afterwards

Every contractor has to issue a CIS deduction statement for each tax month in which a deduction was made, within 14 days of the tax month ending on the 5th. It has to carry the contractor’s name and employer reference, the subcontractor’s name, UTR and verification number, the gross payment, the materials figure and the amount deducted. That statement is the subcontractor’s only evidence for the reclaim, and it is where the calculation above has to reconcile exactly.

Love Invoicing applies the deduction per line at invoice time, so the labour and materials split is already correct and the statement figures fall out of the invoices rather than being rebuilt from a spreadsheet at month end. See the VAT, CIS and MTD guide for how it fits with the rest of the tax picture, or Making Tax Digital for CIS subcontractors for what changes as the thresholds step down.

Guidance, not tax advice. Rates and rules verified against GOV.UK in September 2026. Check your own position with your accountant.

Stop rebuilding CIS in a spreadsheet.

Love Invoicing applies the deduction per line as you invoice, so month-end reconciles itself.

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