CIS Deduction Calculator

Last updated: October 2026

How much is deducted under CIS? CIS deductions apply only to the labour part of a payment, excluding materials and VAT: 20 percent for a subcontractor registered with HMRC, 30 percent if unregistered or unverified, and nothing for gross payment status. The contractor pays the amount to HMRC as an advance against the subcontractor tax bill.

What is a CIS deduction?

Under the Construction Industry Scheme (CIS), a contractor who pays a subcontractor for construction work usually has to hold back part of the payment and pay it to HMRC. That held-back amount is the CIS deduction. It is not an extra tax: it is an advance payment towards the subcontractor’s own tax and National Insurance bill.

The mistake most online calculators make is applying the percentage to the whole invoice. HMRC’s method does not work that way. The deduction is taken only from the labour element of the invoice, after VAT and the costs HMRC lists (materials you paid for yourself, plant hire and similar) have been taken off. This calculator follows the GOV.UK method line by line, so you can check a contractor’s deduction, and the payment and deduction statement that goes with it, against your own figures.

Rates last reviewed: October 2026. Figures are taken from GOV.UK’s CIS guidance for contractors and subcontractors; sources are listed at the bottom of this page.

How to use it

1. Enter the total invoice amount: the full figure on your invoice for the job, including VAT and materials, before anything is deducted.
2. Choose your deduction status: registered and verified (20 percent), not registered or not verified (30 percent), or gross payment status (0 percent). HMRC tells your contractor which rate to apply when they verify you.
3. If you charged VAT on the invoice, enter the VAT amount. Leave it at 0 if you are not VAT registered.
4. Enter the materials you paid for directly, and any plant hire, consumable stores, fuel used on the job (not for travelling), or manufacturing and prefabrication amounts. Each of these comes off before the deduction is worked out.
5. Read the breakdown: your deduction base (the labour element), the deduction itself, what you will actually be paid, and the same invoice worked at all three rates so you can see what registration or gross status would be worth on your own numbers.

What it calculates and how the formula works

• Deduction base = invoice total − VAT − materials paid for directly − plant hire − consumable stores − fuel other than travel − manufacturing or prefabrication amounts. What is left is, in practice, the labour element of the invoice.
• CIS deduction = deduction base × your rate: 20 percent, 30 percent or 0 percent.
• Amount paid = invoice total − deduction. Only the deduction comes off. VAT and the materials and other excluded costs stay in the amount the contractor pays you.
• Effective rate = deduction ÷ invoice total. Because the percentage applies to the labour element only, the deduction is usually a smaller share of the whole invoice than the headline rate suggests.

The three deduction statuses

Registered and verified: 20 percent. You have registered for CIS as a subcontractor and your contractor has verified you with HMRC using the exact details you registered with (your Unique Taxpayer Reference and business name). HMRC confirms the standard rate and the contractor deducts 20 percent from the labour element of each payment.

Not registered or not verified: 30 percent. If you have not registered, or the details you gave do not match HMRC’s records so the contractor cannot verify you, deductions are taken at the higher rate of 30 percent. It is the same labour-only base, just a bigger slice, which is why registering is worth doing before you start work rather than after.

Gross payment status: 0 percent. Subcontractors who apply to HMRC and pass its business, turnover and compliance tests are paid in full, with no deductions at all, and settle their whole tax bill themselves at the end of the tax year. HMRC reviews gross status, and it can be withdrawn if returns or payments slip. Our guide to what CIS deduction is and how it works covers the gross status tests and how to apply.

Worked examples

Example 1: labour only, 1,000 pounds, registered. The invoice is 1,000 pounds for labour with nothing to take off, so the deduction base is the full 1,000 pounds. At 20 percent the deduction is 200 pounds and you are paid 800 pounds.

Example 2: a 2,000 pound invoice including 500 pounds of materials. You supplied 500 pounds of materials yourself, so the base is 2,000 − 500 = 1,500 pounds. Registered at 20 percent, the deduction is 300 pounds and you are paid 1,700 pounds. A calculator that deducted from the whole invoice would take 400 pounds, a 100 pound over-deduction on one job. At the higher 30 percent rate the deduction on the correct base is 450 pounds and you are paid 1,550 pounds.

Example 3: a VAT-registered subcontractor. Labour 3,000 pounds plus materials 600 pounds gives a subtotal of 3,600 pounds; VAT at 20 percent adds 720 pounds, so the invoice total is 4,320 pounds. The base is 4,320 − 720 (VAT) − 600 (materials) = 3,000 pounds. At 20 percent the deduction is 600 pounds and you are paid 3,720 pounds: the VAT and materials stay in your payment in full.

How deductions count towards your tax bill

Every deduction your contractor makes is paid to HMRC and credited to you as an advance payment towards your tax and National Insurance. At the end of the tax year, a sole trader’s deductions are set against the tax worked out on their Self Assessment return. If the deductions come to more than the final bill, which is common because 20 percent is taken from labour income before expenses are counted, the excess is repaid as a refund once the return is filed. If they come to less, you pay the balance. Limited companies instead set CIS deductions suffered against their PAYE and National Insurance liabilities through payroll, with any surplus refunded after the tax year ends.

Keep every payment and deduction statement. Where a deduction is made, the contractor must give you a statement showing the gross amount, the materials excluded and the deduction taken, within 14 days of the end of each tax month. Those statements are your evidence for the credit you claim on your return, and this calculator’s statement line in the result tells you the figure your statement should show.

Important considerations and limitations

• This calculator works out the deduction from one invoice. It does not work out your final tax bill, which depends on your total income, expenses and allowances for the year. Use the UK Self-Employed Tax Calculator to see what the deductions will be set against.
• Travel and subsistence are not on HMRC’s list of excluded amounts. Only fuel used on the job itself comes off; fuel for travelling to the job, and anything you charge for travel, stays in the deduction base.
• The contractor can ask for receipts or other evidence for materials. Without evidence they estimate the materials cost, and an estimate can be lower than what you actually spent, which pushes the deduction up. Itemise materials on your invoice and keep the receipts.
• CIS covers construction work as HMRC defines it. Some work around the edges of the industry is in the scheme and some is out; if you are not sure whether your work counts as construction work for CIS, check the GOV.UK guidance or ask HMRC before relying on a deduction figure.
• CIS applies to subcontractors, not employees. If a contractor controls how and when you work in the way an employer would, PAYE may apply instead, and no calculator settles that question.
• Figures are estimates based on the CIS rates in force in October 2026. This is not tax advice; check your position with a qualified accountant or HMRC.

What must a contractor do each month under CIS?

Each tax month, a contractor must verify new subcontractors with HMRC, file a CIS monthly return by the 19th, pay the deductions to HMRC by the 22nd when paying electronically, and give each subcontractor a written deduction statement. A return is due even in a month when no subcontractors were paid.

The CIS tax month runs from the 6th of one month to the 5th of the next. The monthly return (form CIS300, usually filed online) is due by the 19th, payment of the deductions is due by the 22nd for electronic payment or the 17th if paying by post, and each subcontractor must receive their deduction statement within 14 days of the end of the tax month. Keep those statements: a subcontractor needs them as evidence of deductions when they file Self Assessment, and HMRC charges penalties starting at 100 pounds for a late monthly return, even when the return is nil. Verification matters before the first payment too, because HMRC, not the subcontractor, tells you whether to apply the 0, 20 or 30 percent rate.

Does CIS apply to deemed contractors and reverse charge VAT?

Yes, in two situations freelancers often miss. First, some organisations that are not construction businesses are treated as deemed contractors because they spend heavily on construction, including property developers, local authorities, housing associations and large businesses above HMRC spending threshold. If your client is a deemed contractor, CIS deductions can apply even though construction is not their trade. Second, where the domestic reverse charge applies to a construction service, the customer accounts for the VAT instead of the supplier, and the CIS deduction is worked out on the payment excluding VAT, never on the VAT itself. Our guide to reverse charge VAT explains when that applies, and our construction invoice template shows how to lay out labour, materials, VAT and the CIS deduction as separate lines so neither is applied to the wrong amount.

Frequently asked questions

What are the CIS deduction rates?

Three rates. 20 percent where the subcontractor is registered for CIS and the contractor can verify them, 30 percent where either of those fails, and 0 percent where the subcontractor holds gross payment status. HMRC tells the contractor which rate to apply at verification.

Is CIS deducted from materials and VAT?

No. The deduction applies to the labour element only. VAT, materials you paid for directly, plant hire, consumable stores, fuel used on the job (not for travelling), and manufacturing or prefabrication amounts all come off the invoice total before the percentage is applied. A contractor deducting 20 percent of your whole invoice, materials included, is over-deducting.

Is a CIS deduction my final tax bill?

No. It is an advance payment towards your tax and National Insurance, credited to you by HMRC. Your actual bill is worked out at the end of the tax year, on your Self Assessment return if you are a sole trader. Because deductions are taken before your expenses are counted, many subcontractors have paid too much and get a refund.

Why is my contractor deducting 30 percent?

Almost always because HMRC could not verify you as a registered subcontractor: you have not registered for CIS, or the name or Unique Taxpayer Reference you gave the contractor does not match HMRC’s records exactly. Registering, or correcting the details so they match, brings future deductions down to 20 percent.

How do I get gross payment status?

You apply to HMRC and must pass three tests: a business test (you do construction work in the UK, run through a business bank account), a turnover test on your construction income, and a compliance test showing your tax returns and payments have been on time. With gross status you are paid in full and settle all your tax yourself. HMRC reviews the status and can remove it.

How do I check a deduction on my payment statement?

Run your invoice figures through this calculator. Your payment and deduction statement, which the contractor must give you within 14 days of the end of each tax month, should show the same gross amount, the same materials excluded and the same deduction. If the statement shows a deduction taken from materials or VAT, query it with the contractor first; the figures here follow the GOV.UK method.

Related tools and guides

At year end your deductions are set against the tax on your trading profit: the UK Self-Employed Tax Calculator shows that bill, and the UK Income Tax Calculator breaks down the income tax bands behind it. For the invoices themselves, start from the contractor invoice template and split labour and materials into separate lines, which is what makes a correct CIS deduction possible. For the full picture of the scheme, read our guide to CIS deductions.

Sources: GOV.UK, “What you must do as a CIS contractor” (gov.uk) and “What you must do as a CIS subcontractor” (gov.uk), including the deduction rates, the list of amounts deductions are not taken from, and the rule that deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.