CIS calculator for subcontractors

How the CIS deduction is worked out

The contractor takes the CIS rate off the labour on your invoice, not the whole invoice. Under the Construction Industry Scheme, HMRC tells the contractor which rate to use when they verify you: 20% for a registered subcontractor, 30% for an unregistered one, and 0% with gross payment status. For 2026/27, starting 6 April 2026, those three rates have not changed.

HMRC's method has two steps. First, take the VAT off the invoice total. Second, take off the costs you paid for yourself: materials, plant hire, consumables, fuel used on the job and prefabricated parts. The CIS rate is applied to what is left, and the contractor pays you the full invoice minus that deduction. That is why the calculator has three boxes: Labour, Materials, and Plant hire, consumables, fuel on the job.

The deduction is not a fine and it is not lost. It is tax paid in advance on your behalf, and it counts towards your Income Tax and National Insurance for the year. That is why the payment and deduction statements matter: they are your receipts.

A worked example, line by line

Say you are a dryliner, VAT-registered and CIS-registered, invoicing a main contractor for a fortnight on a block of flats. Your invoice shows £2,400 labour, £600 of board, studs and fixings you bought yourself, and £150 for a scaffold tower you hired for the job. Put £2,400 in Labour, £600 in Materials and £150 in Plant hire, consumables, fuel on the job, then answer Yes to both VAT questions. The tool does this:

• Invoice total before VAT: £2,400 + £600 + £150 = £3,150.
• Amount the CIS rate applies to: £3,150 minus £600 materials minus £150 plant hire = £2,400.
• CIS deduction at 20%: £2,400 × 0.20 = £480.
• VAT: the domestic reverse charge applies, so you add no VAT. Your invoice shows the VAT the contractor must account for, £3,150 × 0.20 = £630, but it is not part of what they pay you.
• Paid to you: £3,150 minus £480 = £2,670.
• If you were unregistered (30%): £720 deducted, £2,430 paid.
• With gross payment status (0%): nothing deducted, £3,150 paid.

What CIS is not taken from

HMRC's subcontractor guide lists what contractors will not take CIS deductions from: VAT, materials you paid for directly, plant hired for the job, consumable stores (kit used up on the job) and the cost of manufacturing or prefabricating materials. The contractor's version of the same guide adds fuel used on the job, except fuel for travelling.

Two things catch people out. Travel, fuel to get to site and accommodation are not on the list. If you put £180 for digs on a job in Kent onto your invoice, CIS is taken from it, the same as your day rate, so it goes in the Labour box. HMRC's own CIS 340 guide shows exactly this, with accommodation and fuel taxed alongside the labour.

The other is mark-up. The deduction ignores the price you charge for materials and uses the price you paid. If you bought £400 of copper and fittings and charge the contractor £480, CIS is taken from the extra £80 as if it were labour. The contractor can ask for receipts, and if you have none they can estimate the materials figure themselves.

• Not deducted: materials at cost, plant hire, consumables, fuel used on the job, prefabrication costs, VAT.
• Deducted: your labour, your gang's labour, travel, fuel for travelling, accommodation and subsistence, and any mark-up on materials.
• Taken off first by some contractors: a CITB levy. HMRC's CIS manual says the levy is excluded from the gross payment, so CIS is worked out after it comes off. Check how your contractor shows it on your statement.

CIS, VAT and the reverse charge

CIS is always worked out before VAT, and VAT is never deducted. Whether VAT goes on your invoice at all is a separate question, answered by the VAT domestic reverse charge, which has applied to building work since 1 March 2021.

According to HMRC's guide for suppliers, you must use the reverse charge when all of these are true: you are VAT-registered, your customer is VAT-registered, the payment is reported under CIS, and the job is not zero-rated (so it would carry 20% or 5%). You then charge no VAT. The contractor works out the VAT and pays it to HMRC through their own return.

It does not apply once the customer confirms in writing that they are an end user (a VAT and CIS-registered business that uses the work itself rather than selling it on) or an intermediary supplier linked to one. It does not apply to work for a homeowner, who is not VAT-registered. And it does not apply to zero-rated work, such as most new-build housing.

When the reverse charge applies, HMRC's technical guide says the invoice must still show everything a VAT invoice needs, state how much VAT is due under the reverse charge without adding it to the total, and say the customer must account for it. Wording such as "Reverse charge: customer to pay the VAT to HMRC" or "Reverse charge: VAT Act 1994 Section 55A applies" does the job. The invoice generator adds it for you.

Mistakes that cost subcontractors money

Most CIS problems are paperwork, not maths. These are the ones worth checking before you chase a contractor or file your return.

Getting your deductions back

If you are a sole trader, you put your gross pay and the total CIS deducted on your Self Assessment return. HMRC sets the deductions against your tax and National Insurance, and pays back anything over. Your van, tools and other allowable costs come off your profit first, which is why a subcontractor on 20% can end up with a refund.

If you trade as a limited company, the deductions go against the company's PAYE bill through an Employer Payment Summary each month, not through the Corporation Tax return.

Gross payment status stops deductions altogether. HMRC's tests include paying your tax on time, running the business through a bank account, and turnover of at least £30,000 a year for a sole trader, ignoring VAT and materials. Partnerships and companies need £30,000 per partner or director, or £100,000 in total.

This calculator shows the deduction on one invoice. It does not work out your tax bill for the year, and it is an estimate, not tax advice. If the figures on your statements look wrong, an accountant who handles CIS will sort it faster than the phone line.

Common questions