Subcontract work and CISNew
What a contractor withholds from your invoice, why it is not a debt, and how to set it up.
Written 6 October 2026 · updated 8 October 2026
What is said in this recording
If you subcontract for builders, developers or letting agents, they do not pay you the invoice total. Under the Construction Industry Scheme they withhold tax from the labour and send it to HMRC against your tax bill. TaskMyJob works the deduction out on every invoice so what you are owed never includes money that was never coming.
Step by step
- 1
Turn CIS on in Settings, under How you work.
You are asked at signup if your trade is a construction one. If you were not asked, or you have started subcontracting since, the tick box is there — it says “CIS tax is deducted from what we invoice”.
- 2
Set the rate on the customer who deducts it.
On their record: 20% if they have verified you with HMRC, 30% if they have not, or gross status if HMRC has given you that. It sits on the customer rather than on your business because the same subcontractor can be verified by one contractor and not another.
- 3
Mark each invoice line as labour or materials.
A Labour or materials column appears on the invoice and quote once both of the above are set. Nothing is guessed: a line nobody has marked will stop the invoice rather than produce a confident wrong number.
- 4
Raise the invoice as normal.
The deduction is shown on your copy and on the customer’s, and what is still owed as money comes down by it. Nothing chases the customer for it.
Worth knowing
It comes off labour only, and before VAT
Excluded: materials that become part of the finished work, consumable stores, fuel for plant, plant HIRED from somebody else, and the cost of manufacturing or prefabricating. Not excluded, so still deducted from: labour, travel, subsistence, accommodation recharged on, fuel for travelling, plant you OWN rather than hire, and hired plant where the contract includes the operator. The deduction is worked out on the net figure — taking it from a VAT-inclusive amount would overstate it by a fifth and underpay you.
The materials figure must be what you actually paid
HMRC does not allow a mark-up in it, and the contractor is expected to check the amount is reasonable. Inflating it under-deducts, and it is the subcontractor HMRC pursues. TaskMyJob watches for it: put a cost against a materials line and charge more than that cost, and the quote and the invoice both say so while you are still looking at them.
The mark-up warning is a warning, not a refusal
It never stops you sending anything. There are honest reasons for the figure to be higher — a delivery charge rolled into the line, a part bought months ago at a different price — and you may already have taken advice. It also says nothing at all about a line with no cost against it, because an uncosted line is unknown rather than free, and nothing about labour, which is what the deduction comes off and is expected to carry your margin.
The deduction is not money you have lost
It is your own tax, paid early on your behalf. The contractor must give you a payment and deduction statement within 14 days of the end of the tax month — and HMRC tax months run from the 6th to the 5th, not calendar months. Keep those statements: they are what you reclaim against.
Turning it off changes nothing already issued
The deduction is stored on each invoice as it was raised, so a customer holding a copy of one still sees the figures they were sent.
It reaches your accounts too
Xero, QuickBooks and Sage each get the deduction as a line of its own against a CIS suffered account, so the invoice over there is owed exactly what the contractor will actually pay. It is never sent as a credit note — a credit note forgives the money and records no tax suffered, which is the opposite of what happened. Tell us where it posts in Settings → the accounting card; until you do, an invoice carrying CIS is held back and the card says so, rather than being sent at its gross total and sitting part-paid for ever.
Working it out without signing in
There is a free CIS calculator on the website — linked above — which runs the same rules this does. Useful for checking a figure a contractor has given you, and for sending to somebody who does not use TaskMyJob.