CIS deduction calculator
Work out the CIS deduction on a payment to a subcontractor — and exactly what lands in their bank. Deducted on labour only, never on materials.
Registered under CIS — deduction rate 20%.
The whole invoice before any deduction — labour and materials together.
What the subcontractor paid for materials. Leave at zero for labour-only work. Nothing is deducted from this part.
Enter the total payment to see the deduction and what actually gets paid.
Check the current rates before you rely on this. Deduction rates are set by HMRC and can change. Confirm them on gov.uk — and speak to your accountant about your own position. This calculator is a working-out aid, not tax advice.
CIS comes off labour, not materials
This is the part that catches people, and it's worth being precise about because getting it wrong costs the subcontractor real money on every invoice. Under the Construction Industry Scheme the contractor deducts a percentage from the payment and sends it to HMRC. That percentage applies only to the labour element. The materials the subcontractor paid for are handed over in full, untouched.
Labour is £2,000 − £500 = £1,500.
At 20% the deduction is £1,500 × 20% = £300.
They get paid £2,000 − £300 = £1,700.
Deducting 20% from the whole £2,000 would have taken £400 — a hundred pounds too much, on one invoice.
So the materials figure has to be stated on the invoice. If it isn't, the contractor has nothing to work from and the deduction comes off the lot. Split labour and materials on every CIS invoice as a matter of habit — our guide on what to put on an invoice covers the rest of what needs to be on there.
It's an advance on your tax, not an extra tax
The single most common misunderstanding about CIS is that it's a tax on being a subcontractor. It isn't. It's your own income tax, collected early — the contractor pays it to HMRC in your name, against the bill you were going to get anyway.
At the end of the tax year you total up what was deducted across all your contractors and set it against what you actually owe:
- Deducted more than you owe? You're due the difference back as a refund. For a lot of subcontractors with real expenses this is the normal outcome, and it's why the annual return is worth doing promptly rather than in January.
- Deducted less than you owe? You pay the balance in the usual way.
Sole traders reclaim it through their Self Assessment return; limited companies offset it against their payroll liabilities instead, which works differently — worth getting your accountant to set up properly the first time.
Keep every payment and deduction statement your contractors give you. That's your evidence for what was taken, and reclaiming without it is painful. Our guide on getting paid as a subbie goes through the paperwork side.
The three rates, and why yours might be wrong
Which rate a contractor applies depends on the subcontractor's status when they verify them with HMRC:
- Registered under CIS — the standard deduction.
- Not registered — a higher deduction. If you're being deducted at the higher rate and you think you shouldn't be, registering is the fix, and it's free.
- Gross payment status — nothing is deducted and you settle the full amount through your own return. It has to be applied for and there are turnover and compliance tests to meet; gov.uk sets out the current conditions.
If the rate coming off your payments looks wrong, that usually means either your registration didn't complete or the contractor verified you before it did. Both are fixable, but only going forward — so it's worth checking the first statement from any new contractor rather than the fifth.
A note on VAT
Work in ex-VAT figures here. CIS is calculated on the VAT-exclusive amount, so putting a VAT-inclusive total into the box above will overstate the deduction. If you're on the VAT reverse charge for construction the invoice mechanics change too, and that's worth checking separately.