CIS Tax Calculator

Estimate Construction Industry Scheme deductions from a subcontractor invoice, with VAT, direct materials and HMRC verification status shown separately.

Invoice Details

Invoice before VAT Labour, plant and services before VAT Enter the invoice value before VAT and before any CIS deduction. £ Eligible direct materials Materials bought for this contract that should be excluded from the CIS deduction base. £

Status and VAT HMRC verification result Select the deduction status returned by HMRC for the subcontractor. Custom rate, if needed Use only if your accounting record tells you to apply a different rate. %

Payment settings VAT treatment Choose whether VAT is paid to the subcontractor or handled outside the cash payment. VAT rate Default is 20%. Change it if the invoice uses a different VAT treatment. % Tax year label For record keeping only. CIS rates are verified through HMRC, not chosen from this page.

CIS Deduction Result

Amount to withhold for HMRC–Enter invoice details to estimate the deduction.

This estimate applies the selected CIS rate to the labour-only deduction base. It is not tax advice and cannot replace HMRC verification.

What This CIS Estimate Includes

The Construction Industry Scheme is a tax deduction system for many payments from contractors to subcontractors in construction. The usual calculation is not a flat percentage of the full invoice. VAT is not part of the CIS deduction base, and direct materials can normally be excluded when they are properly identified on the invoice and relate to the contract.

This estimator separates the invoice before VAT, direct materials, VAT treatment and HMRC verification result. It then shows the amount withheld for HMRC and the cash paid to the subcontractor. The result is useful for checking an invoice, preparing a payment run or explaining why the paid amount differs from the invoice total. It does not decide whether the work is inside CIS, whether a material cost is allowable, or whether the subcontractor should have gross payment status.

Calculation Method

CIS deduction base = invoice before VAT - eligible direct materials CIS deduction = deduction base x selected CIS rate VAT paid = invoice before VAT x VAT rate, unless reverse charge or no VAT paid is selected Net payment = invoice before VAT + VAT paid - CIS deduction

The estimator floors the deduction base at zero, because materials cannot create a negative CIS deduction. Amounts are rounded to the nearest penny. The selected tax year is shown for your own record, but the important live step is HMRC verification. Contractors should verify subcontractors and keep the deduction statement that explains the payment.

CIS Rate Table

HMRC result	Common deduction rate	What it means in the estimator
Gross payment status	0%	No CIS amount is withheld from the payment, although the invoice may still need CIS records.
Registered for CIS	20%	The standard deduction is applied to the labour-only deduction base.
Not registered or not verified	30%	The higher deduction is applied when HMRC verification requires it.
Custom accounting adjustment	User entry	Only use this where your payroll, bookkeeping or adviser record gives a specific adjustment.

Worked CIS Examples

Registered subcontractor

An invoice is GBP 2,500 before VAT, with GBP 600 of direct materials. The deduction base is GBP 1,900. At 20%, the CIS deduction is GBP 380. If VAT is paid at 20%, the cash payment is GBP 2,620.

Gross payment status

The same invoice with gross payment status has a 0% deduction. If VAT is added and paid, the cash payment is the invoice plus VAT. The contractor should still keep the verification and payment record.

Unverified subcontractor

If HMRC verification gives the 30% rate, the GBP 1,900 deduction base gives a GBP 570 deduction. That larger withheld amount is paid to HMRC, not kept as a discount by the contractor.

Materials And VAT Checks

Direct materials should be separated on the invoice. A broad allowance, hidden margin or unsupported figure can cause problems if records are checked later. Plant hire, consumables, travel, subsistence, scaffolding and manufacturing costs can need care, so follow HMRC guidance or ask a qualified adviser if the invoice is not straightforward.

VAT is separate from the CIS deduction. Domestic reverse charge VAT can also change the cash flow because the subcontractor may not receive VAT in the same way as an ordinary VAT invoice. The estimator lets you set VAT paid to zero for reverse charge or no-VAT situations, but it does not decide which VAT rule applies.

When Not To Rely On The Result

The work may be outside CIS, such as some professional services or private domestic jobs.
The subcontractor has not been verified with HMRC.
The invoice mixes CIS and non-CIS work without a clear split.
Materials are not supported by contract records, receipts or a clear invoice line.
You are dealing with employment status, IR35, agency labour, payroll or disputed tax treatment.

FAQs

Is CIS deducted from the full invoice?

No. CIS is normally calculated on the labour element, excluding VAT and allowable direct materials. The estimator uses invoice before VAT minus direct materials as the deduction base.

Does VAT change the CIS deduction?

VAT is not part of the CIS deduction base. VAT can still change the cash payment if it is charged and paid to the subcontractor, so the estimator shows VAT as a separate line.

Which CIS rate should I use?

Use the rate returned by HMRC verification. Gross payment status is 0%, registered subcontractors are commonly 20%, and unregistered or unverified subcontractors are commonly 30%.

Can a subcontractor claim back CIS deductions?

CIS deductions are credited against the subcontractor’s tax and National Insurance position. The recovery route depends on whether the subcontractor is a sole trader, partner or company.

Is this suitable for payroll or employment status?

No. CIS does not by itself decide employment status. If the worker should be treated as an employee, payroll rules may apply instead.

What records should a contractor keep?

Keep verification details, deduction statements, invoices, material evidence and monthly return records. HMRC guidance gives the official record requirements.

Sources

HM Revenue & Customs. (2026). Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340). GOV.UK. https://www.gov.uk/government/publications/construction-industry-scheme-cis-340
GOV.UK. (2026). What you must do as a Construction Industry Scheme contractor. GOV.UK. https://www.gov.uk/what-you-must-do-as-a-cis-contractor
GOV.UK. (2026). Construction Industry Scheme. GOV.UK. https://www.gov.uk/what-is-the-construction-industry-scheme