SamFree tool · no signup
CIS deduction calculator
Under the Construction Industry Scheme, the contractor takes tax from the labour part of a payment. Materials and VAT are never included.
Under the Construction Industry Scheme, contractors deduct 20% from a registered subcontractor's labour (30% if they aren't registered, nothing with gross payment status) and pay it to HMRC. The deduction is on labour only, never materials or VAT.
Get paid without chasing
Sam sends invoices and polite, automatic reminders for every unpaid one, including invoices from Xero, QuickBooks, FreeAgent and Sage.
Start freeHow it works
Deduction = labour × CIS rate · Paid to the subcontractor = labour − deduction + materials
The rate is 20% for subcontractors registered for CIS, 30% for those not registered, and 0% for those with gross payment status. See the Construction Industry Scheme on GOV.UK.
Worked example
A registered subcontractor invoices £1,000 labour and £400 materials. The deduction is £1,000 × 20% = £200, paid to HMRC by the contractor. The subcontractor receives £1,200.
The deduction counts towards the subcontractor's tax bill. Estimate that bill with the Self Assessment tax calculator.
Questions
Is CIS taken from materials?
No. Only from labour. Materials the subcontractor bought for the job, plant hire and VAT are left out.
How do I get the 20% rate instead of 30%?
Register with HMRC as a CIS subcontractor before you start work. Contractors check your status when they take you on.
What happens to the money deducted?
The contractor pays it to HMRC for you. It counts as tax already paid when you do your Self Assessment, so keep every monthly CIS statement.
Sam for your business: Builders · Landscapers · Painters and decorators · Tilers · Plasterers · Locksmiths · all industries