TOOL 02CISESTIMATE / NOT ADVICE
Work out what a UK contractor withholds under the Construction Industry Scheme (CIS), and what the subcontractor should receive. Free, no sign-up, and nothing leaves your browser.
Quick answer: under CIS, the contractor takes 20% (registered subcontractor), 30% (unregistered or unverified) or 0% (gross payment status) off the labour part of an invoice. VAT, materials the subcontractor paid for, plant hire, consumable stores, non-travel fuel and prefabrication costs come off first. For example, £1,500 labour + £200 materials at 20% = a £300 deduction, so the subcontractor is paid £1,400. Source: GOV.UK.
Per HMRC, CIS is applied after removing VAT and qualifying exclusions (materials paid directly, plant hire, consumable stores, non-travel fuel, manufacturing / prefabrication) from the invoice. The remaining amount is typically labour (and travelling / subsistence). The contractor then applies the rate HMRC gave on verification:
Net payable ≈ (labour − CIS) + materials + VAT. Deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Official pages: Make deductions and pay subcontractors · Subcontractor: get paid · CIS 340 guide
HMRC sets out the order of the sum. A contractor paying a subcontractor under CIS:
| Subcontractor status | CIS rate |
|---|---|
| Registered for CIS and verified by HMRC | 20% |
| Not registered, or HMRC cannot verify them | 30% |
| Gross payment status | 0% |
Sources: GOV.UK: make deductions and pay subcontractors · CIS 340 guide (paras 3.11 to 3.14)
This example comes from HMRC’s CIS 340 guide (example D3). A VAT-registered painter supplies and fixes for £600: £400 labour and £200 materials (£240 including VAT, but the VAT is excluded because the painter is VAT registered), plus £120 VAT on the invoice. The painter is registered for CIS, so the rate is 20%.
| Labour | £400.00 |
| Materials (excluding VAT) | £200.00 |
| VAT on invoice (20%) | £120.00 |
| Invoice total | £720.00 |
| Amount liable to deduction (labour only) | £400.00 |
| CIS deduction at 20% | −£80.00 |
| Net paid to subcontractor (£720 − £80) | £640.00 |
| Contractor pays HMRC | £80.00 |
If the same painter were unregistered (30%), the deduction would be £120, so they would be paid £600. With gross payment status, nothing is deducted and they are paid £720. To try it, enter £400 labour and £200 materials in the calculator above and tick “Include VAT” at 20%.
Source: CIS 340, Appendix D, examples D3 and D6. If the domestic reverse charge applies, there would be no VAT to pay the subcontractor: leave VAT unticked.
20% if the subcontractor is registered for CIS and the contractor can verify them, 30% if they are not registered or cannot be verified, and 0% if they have gross payment status. HMRC tells the contractor which rate to use when the contractor verifies the subcontractor.
Source: GOV.UK: make deductions and pay subcontractors · GOV.UK: get paid
No. Start with the gross invoice, then take off VAT, materials the subcontractor paid for directly, consumable stores, fuel (except fuel for travelling), plant hire for the job, and the cost of manufacturing or prefabricating materials. The CIS rate is applied only to what is left, which is usually labour plus any travel or subsistence.
Source: GOV.UK: make deductions and pay subcontractors · CIS 340 guide, section 3.11 to 3.14
Not from materials the subcontractor bought for the job. The contractor can ask for evidence such as receipts; if there is none, the contractor must estimate the materials cost. If the subcontractor is VAT registered, the materials figure is the cost without VAT. If they are not VAT registered, the VAT they paid on materials counts as part of the materials cost.
Source: GOV.UK: get paid · CIS 340 guide, Appendix D examples
VAT comes off first. The deduction is never taken from VAT. Between VAT-registered businesses, most CIS work falls under the VAT domestic reverse charge (in force since 1 March 2021), so the contractor accounts for the VAT and the subcontractor is not paid it. It does not apply if the customer is not VAT registered or has told you in writing that they are an end user or intermediary supplier.
Source: GOV.UK: VAT domestic reverse charge technical guide
The contractor does. They pay HMRC every month by the 22nd, or by the 19th if paying by post, alongside any PAYE and National Insurance. The money counts as an advance payment towards the subcontractor's tax and National Insurance.
Source: GOV.UK: pay deductions to HMRC
A payment and deduction statement within 14 days of the end of each tax month. Tax months run from the 6th to the 5th, so for 6 May to 5 June the statement is due by 19 June. Keep every statement, because HMRC may ask for them as evidence when you claim the deductions back.
Source: GOV.UK: make deductions and pay subcontractors · GOV.UK: get paid
They are set against your tax bill. Sole traders and partners put their total pay before deductions as income, and the total deductions as CIS deductions, on their Self Assessment return; HMRC refunds anything overpaid. Limited companies claim them through their payroll using an Employer Payment Summary (EPS), not the Corporation Tax return.
Source: GOV.UK: pay tax and claim back deductions
Either you are not registered for CIS, or the contractor could not verify you. Give contractors the exact details you registered with, including your Unique Taxpayer Reference (UTR) and legal business or trading name. A mismatch can mean the higher rate.
Source: GOV.UK: get paid · GOV.UK: CIS subcontractor overview
By the 19th of every month, covering the tax month that ended on the 5th. A return that is one day late carries a £100 penalty, and the penalties grow after that. From 6 April 2026 a contractor must also file a nil return for a month with no subcontractor payments, unless they have told HMRC they are inactive.
Source: GOV.UK: file your monthly returns · GOV.UK: CIS administration changes from April 2026
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