Check the CIS deduction on a payment.
Enter the invoice, any eligible excluded costs and the rate HMRC confirmed. See the deduction, the payment and the VAT position. No sign-up needed.
Your figures
The total of the invoice before any VAT.
For example, materials the subcontractor bought for the job, or qualifying plant hire. Use the actual cost where available. If evidence is unavailable, HMRC allows the contractor to estimate the actual cost of materials. Do not use the selling price or a blanket percentage allowance. Leave blank if none apply.
CIS deduction estimate — MFFS Accountancy
Your calculation
Enter the invoice value to see the deduction and the payment.
What amount is subject to CIS?
CIS is not simply a percentage of every invoice, nor is its deduction base always “labour only”. VAT and certain eligible costs can be excluded. These may include materials directly paid for by the subcontractor and qualifying plant-hire or other costs under HMRC’s rules. Travel and subsistence are not automatically excluded.
The rate should be established through HMRC verification. Registration alone is not a substitute for checking the applicable rate.
This calculator provides an estimate from the figures entered. It does not determine whether the work is within CIS, establish the correct exclusions or calculate a tax refund.
Before you rely on the figure
- VAT is never part of the deduction.
- Only eligible costs come out of the deduction base. A mark-up on materials does not.
- The rate comes from HMRC verification, not from registration alone.
- Contractors verify a new subcontractor before paying them for the first time. A subcontractor you have included on a CIS return in the current or previous two tax years does not need verifying again.
- Keep invoices showing the excluded costs separately.
How the calculation works
- Invoice value excluding VAT, less eligible excluded costs, gives the amount subject to CIS.
- The amount subject to CIS times the HMRC-confirmed rate gives the deduction.
- Invoice value excluding VAT, less the deduction, gives the payment before VAT.
- Add any VAT actually charged. Under the reverse charge, none is added.
Worked examples
20% rate, VAT charged
A £1,000 invoice includes £200 of eligible material cost. £800 is subject to CIS, so the deduction is £160. The payment is £840 before VAT; with £200 VAT the subcontractor receives £1,040.
30% rate, reverse charge
A £6,500 invoice includes £1,000 of eligible costs. £5,500 is subject to CIS, so the deduction is £1,650. The subcontractor receives £4,850; the customer accounts for the VAT.
Gross Payment Status, no VAT
A £4,000 invoice includes £500 of eligible costs. No deduction is made, and the subcontractor receives £4,000.
Common mistakes
- Working out the deduction on a figure that includes VAT.
- Excluding a materials selling price or a blanket percentage allowance instead of the actual cost. Where evidence is unavailable, HMRC allows the contractor to estimate the actual cost of materials.
- Treating all excluded costs as “materials”, or every non-labour cost as excluded. Travel and subsistence are not automatically excluded.
- Using a rate from registration rather than from HMRC verification.
- Adding VAT to a payment that falls under the domestic reverse charge.
Records to keep
- HMRC verification references and the rate given.
- Invoices that show excluded costs separately from the rest.
- Monthly CIS returns and payment and deduction statements.
- Keep CIS records for at least three years after the end of the tax year they relate to.
Frequently asked questions
Is CIS deducted from VAT?
No. The deduction is worked out on the invoice value excluding VAT, less any eligible excluded costs.
Is CIS deducted from materials?
Not from the actual cost of materials the subcontractor paid for directly. It is deducted from any mark-up added to those materials.
What decides whether the rate is 20%, 30% or 0%?
HMRC verification. 20% applies to registered subcontractors, 30% where HMRC cannot verify the subcontractor, and 0% where they hold Gross Payment Status.
How does the domestic reverse charge affect the payment?
The subcontractor does not charge VAT, so the payment is the invoice value less the CIS deduction. The customer accounts for the VAT on their own return.
When are CIS returns due?
By the 19th of the month after the tax month ends. Tax months run from the 6th of one month to the 5th of the next.
Can a subcontractor get CIS deductions back?
Deductions count towards the subcontractor’s tax. If more has been deducted than is owed, the balance can be repaid or offset. We can check this for you.