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CIS Deduction Calculator
Calculate Construction Industry Scheme deductions instantly. Supports registered (20%) and unregistered (30%) rates with material exemptions.
How CIS Deductions Work
Under the Construction Industry Scheme, contractors must deduct tax from payments made to subcontractors for construction work and pass it to HMRC. The deduction rate depends on whether the subcontractor is registered with HMRC.
CIS Deduction Rates
- 20% — subcontractor is registered with HMRC for CIS
- 30% — subcontractor is not registered
- 0% — subcontractor has gross payment status
Materials Are Exempt
CIS deductions only apply to the labour portion of an invoice. If a subcontractor supplies materials, the cost of those materials is deducted from the gross amount before calculating the CIS deduction. Always list materials separately on your invoice.
Example Calculation
A registered subcontractor invoices £1,000 for a job — £300 materials and £700 labour. The CIS deduction is 20% of £700 = £140. The contractor pays £860 to the subcontractor and £140 to HMRC.
Frequently Asked Questions
What is CIS?
The Construction Industry Scheme (CIS) is a UK tax scheme where contractors deduct money from subcontractor payments and pass it to HMRC. These deductions count as advance tax payments for the subcontractor. CIS applies to construction work including building, repairs, decorating, demolition, and civil engineering.
What are the CIS deduction rates?
There are two CIS deduction rates: 20% for subcontractors registered with HMRC for CIS, and 30% for subcontractors who are not registered. Some subcontractors with a strong compliance record can apply for gross payment status (0% deduction).
Are materials subject to CIS deductions?
No, the cost of materials supplied by the subcontractor is not subject to CIS deductions. Only the labour element of the invoice is deducted. The subcontractor should clearly separate materials and labour costs on their invoice.
How do I register for CIS as a subcontractor?
You can register for CIS online through your Government Gateway account, by phone, or by post. You need your National Insurance number and Unique Taxpayer Reference (UTR). Once registered, contractors deduct at 20% instead of 30%.
Do I need to register as a contractor under CIS?
You must register as a contractor with HMRC if you pay subcontractors more than £3 million per year for construction work, or if your average annual spending on construction is more than £1 million over 3 years. Many smaller businesses also register voluntarily.
Can I reclaim CIS deductions?
Yes. If you are a sole trader, CIS deductions are offset against your income tax and National Insurance when you file your Self Assessment tax return. If you are a limited company, CIS deductions are offset against your PAYE liability or claimed as a repayment.
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