CIS calculator
What a contractor will deduct from your invoice, and what actually reaches your bank. Free, and nothing to sign up for.
Your invoice
Your work, plus travel, subsistence, accommodation recharged on, fuel for travelling, plant you own, and hired plant where the contract includes the operator.
Materials that become part of the finished work, consumable stores, fuel for plant, and plant hired from somebody else. At what they actually cost you — HMRC allows no mark-up here, and the contractor is expected to check the figure is reasonable.
Set by HMRC when the contractor verifies you. Unverified is 30%.
VAT
An end user has the work done for themselves rather than supplying construction services on, and HMRC requires them to tell you in writing. With nothing on file the reverse charge applies anyway — being told nothing entitles you to assume it.
What you get paid
- Labour
- £600.00
- Materials
- £400.00
- Subtotal
- £1,000.00
- VAT (20%) — reverse charge
- £0.00
- Invoice total
- £1,000.00
- VAT for them to account for (20%)
- £200.00
- CIS deducted (20% of £600.00 labour)
- -£120.00
The £120.00 is not lost. The contractor pays it to HMRC against your tax bill, and must give you a payment and deduction statement within 14 days of the end of the tax month. Keep it — it is what you reclaim against.
The domestic reverse charge applies. You charge no VAT, and your invoice must say so — for example “Reverse charge: VAT Act 1994 Section 55A applies. Customer to pay the VAT of £200.00 (20%) directly to HMRC.”
One VAT rate per invoice. If this work mixes zero-rated new-build with standard-rated work, raise them as two invoices — the reverse charge follows this rate across the whole document. This works at the standard 20% rate, so zero-rated new-build work needs figuring separately.
TaskMyJob does this on every invoice.
Mark a line as labour or materials and the deduction, the reverse charge and the wording are handled for you — and what you are owed never includes tax that was never coming.
Try it free for 60 daysHow the CIS deduction is worked out
Under the Construction Industry Scheme, a contractor withholds tax from what they pay a subcontractor and sends it to HMRC. The rate is 20% if you are registered and the contractor has verified you, 30% if you are not verified, and nothing if HMRC has given you gross payment status.
It comes off labour only, and before VAT
Materials are not deducted from. Nor is plant hire without an operator, or consumables. Travel, subsistence and plant hire with an operator all count as labour. 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 has to 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.
Whether you charge VAT at all
Since 1 March 2021 the VAT domestic reverse charge applies to most construction services between two UK businesses that are both VAT-registered and both registered for CIS, where the customer is not the end user. When it applies you charge no VAT: the customer accounts for it to HMRC themselves, and your invoice has to say so and state the VAT without including it in the amount charged.
An end user is somebody having the work done for themselves rather than supplying construction services on — a developer building to let, for instance. HMRC requires them to tell you in writing, and that written statement is the only thing that stops the charge. If you have not been told, the charge applies anyway: HMRC’s manual says being told nothing entitles you to assume it. Charging VAT on a supply the charge covers has your customer reclaim input tax that was never due, which is what HMRC is currently assessing for.
Zero-rated work is outside the charge. Most new-build housing is zero-rated and carries on being billed as it is now. The figures above work at the standard 20% rate across the whole invoice, so if a month mixes new-build with standard-rated work, do the two separately and invoice them separately — your accountant is the one to ask where the line falls on a particular site.
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, and without one you cannot easily prove the tax was paid.
A note on what this is
This calculator is a guide, not tax advice, and it cannot know everything about your arrangement — connected businesses and intermediary suppliers are both treated differently, for instance, and it works at the standard 20% VAT rate across the whole invoice rather than splitting zero-rated and reduced-rate work out. Check anything that matters with your accountant or with HMRC.
Built by TaskMyJob, which handles CIS and the reverse charge on every invoice it raises. The longer versions of the above are free to read: CIS on a subcontractor invoice, the VAT reverse charge and reclaiming what has been deducted, with the rest of the guides alongside them.