CIS deduction calculator
Work out how much CIS a contractor will deduct from a subcontractor payment, and what you'll actually receive.
CIS deduction (20%)
£200.00
Net payment received
£1,000.00
CIS is deducted only from the labour element of a payment, not materials. Contractors deduct 20% for subcontractors registered with HMRC under CIS, or 30% for those who aren't registered. The deduction counts as an advance payment towards your Income Tax and National Insurance.
The short answer
Under the Construction Industry Scheme a contractor deducts 20% from the labour part of a payment to a subcontractor who is registered for CIS, and 30% if the subcontractor is not registered. Nothing is deducted from materials or VAT. On an invoice for £1,000 labour and £200 materials, a registered subcontractor has £200 deducted and is paid £1,000.
Figures checked against the official sources listed below.
CIS deduction rates
| Subcontractor status | Deduction from labour | Paid on £1,000 labour |
|---|---|---|
| Registered for CIS (net payment status) | 20% | £800 |
| Not registered, or cannot be verified | 30% | £700 |
| Gross payment status | 0% | £1,000 |
The contractor checks your status with HMRC before the first payment, and HMRC tells them which rate to use. Registering for CIS is free and takes the deduction from 30% down to 20% straight away.
What the deduction is not taken from
The contractor works out the deduction after taking these off the invoice total:
- VAT
- Materials you bought for the job
- Consumable stores, and fuel other than fuel for travelling
- Plant and equipment you hired for the job
- The cost of manufacturing or prefabricating materials
Why splitting labour and materials matters
If your invoice shows one total with no breakdown, the contractor may deduct CIS from the whole amount. Show labour and materials on separate lines, and keep the receipts, because a contractor can ask for evidence of what the materials cost you.
Getting CIS deductions back
CIS is not an extra tax. The money deducted is paid to HMRC as an advance towards your Income Tax and National Insurance. A sole trader enters the total CIS deducted for the year on the Self Assessment return, and it is set against the bill. If more was deducted than you owe, HMRC refunds the difference.
The contractor must give you a payment and deduction statement within 14 days of the end of each tax month. Keep every one: they are your proof of what was deducted.
FAQs
Is CIS deducted from materials?
No. CIS is deducted only from the labour part of a payment. The cost of materials you bought for the job is taken off before the deduction is worked out, which is why your invoice should show labour and materials separately.
Is CIS calculated before or after VAT?
Before. The deduction is worked out on the labour amount excluding VAT. VAT is never reduced by CIS.
How much CIS is deducted if I am not registered?
30% of the labour part of each payment, against 20% for a registered subcontractor. On £1,000 of labour that is £300 instead of £200.
Does CIS apply to work for homeowners?
No. CIS applies to payments from a contractor to a subcontractor for construction work. A private householder paying you for work on their own home is not a contractor, so nothing is deducted.
How do I get gross payment status?
You apply to HMRC and must pass three tests: a business test, a turnover test (at least £30,000 a year for a sole trader, not counting VAT and materials) and a compliance test showing your tax returns and payments are up to date.
Sources
- What you must do as a CIS subcontractor: how to get paid (GOV.UK)
- What you must do as a CIS contractor: make deductions and pay subcontractors (GOV.UK)
- Gross payment status (GOV.UK)
This calculator gives an estimate to help you plan. It is not tax or legal advice, and it does not know your full circumstances. Check the official guidance or ask an accountant before you rely on a figure.
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