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CIS Tax Calculator UK

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⚡ CIS Deduction Calculator

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What is the CIS Deduction Rate?

Under the Construction Industry Scheme (CIS), contractors must deduct money from payments made to subcontractors and pass it to HMRC. The rate depends on the subcontractor's registration status:

  • 20% — for subcontractors registered with CIS (most common). The deducted amount is credited against their tax and National Insurance bill.
  • 30% — for subcontractors who are not registered with CIS. HMRC applies a higher rate to encourage registration.
  • 0% (Gross payment status) — for subcontractors approved by HMRC to receive payments without any deductions. You must apply for this separately.
Important: CIS deductions only apply to the labour element of an invoice — not materials. If your invoice covers both labour and materials, separate them clearly.

How to Calculate CIS Deduction

The formula is straightforward:

  • Labour amount × CIS rate = CIS deduction
  • Labour amount − CIS deduction = Net payable to subcontractor

For example: a subcontractor invoices £2,000 labour + £500 materials = £2,500 total. CIS at 20% applies only to labour: £2,000 × 20% = £400 deduction. The contractor pays the subcontractor £2,500 − £400 = £2,100, and sends £400 to HMRC.

CIS and VAT: How They Interact

VAT is calculated on the full invoice amount (labour + materials), while CIS deductions are only on labour. If you're registered for VAT, you'll charge VAT on top of the gross, and the contractor must pay that full VAT amount — CIS does not reduce the VAT.

If the Domestic Reverse Charge applies to your work, the contractor accounts for the VAT instead of you — meaning you don't charge VAT on the invoice at all. Read our full guide to the Domestic Reverse Charge →

Do I Need to Register for CIS?

If you work as a subcontractor in the UK construction industry, you should register for CIS with HMRC. It's free and takes around 10 minutes online. Without registration, contractors will deduct 30% instead of 20% from your payments. How to register as a CIS subcontractor →

Ready to Stop Doing This Manually?

FlashBill automatically calculates the correct CIS deduction on every invoice — including all 6 CIS × VAT combinations. It generates compliant PDF invoices and CIS statements for your accountant. Try FlashBill free →