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UK · Construction Industry Scheme
A CIS subcontractor invoice, with the deduction handled
If you're a subcontractor under the Construction Industry Scheme, your invoice has to make the CIS deduction obvious — labour and materials split apart, because the contractor deducts tax from the labour only. This opens an invoice already laid out that way. Edit the numbers, add your client, export a PDF. It runs in your browser, so your rates never leave your device.
How the CIS deduction works on the invoice
Under CIS, the contractor deducts a percentage from your payment and pays it to HMRC as an advance on your tax. The rate is 20% if you're registered for the scheme, or 30% if you're not. Crucially, the deduction applies to your labour only, not to materials you paid for directly. So the calculation runs:
gross labour − materials you paid for = amount liable to deduction → × 20% = CIS deducted
The pre-filled invoice shows this cleanly: a labour line, a separate materials line (no deduction), and a "less CIS deduction" line so the contractor and you both see the net payable. Keep VAT out of the figure the deduction is calculated on — CIS is worked out on the amount excluding VAT.
The contractor must also give you a payment and deduction statement within 14 days of the tax month end; keep those, as they're your proof of tax already paid.
Questions
Is 20% or 30% deducted?
20% if you're registered with HMRC for the Construction Industry Scheme, 30% if you're not registered or can't be verified. Registering is worth it purely for the cash-flow difference.
Is the deduction taken from materials too?
No. The CIS deduction applies only to the labour element. Materials you paid for directly (keep the receipts) are taken off before the deduction is calculated. That's why the template splits them onto separate lines.
Do I show the CIS deduction on my invoice?
You don't have to, but many subcontractors do, so the contractor can see the net to pay and there are no surprises. Either way, the formal record is the contractor's payment and deduction statement.
What about VAT and the reverse charge?
If you're VAT-registered, most construction services between VAT-registered businesses fall under the domestic reverse charge — you don't charge VAT and you note that the customer accounts for it. The CIS deduction is always calculated on the amount excluding VAT.
Bill the job, keep the receipts.
Open a CIS-ready invoice, put in your labour and materials, export a clean PDF — in your browser, no account.
Open a CIS invoice →Sources
- GOV.UK — Make deductions and pay subcontractors (rates, labour vs materials, statements).
- GOV.UK — CIS subcontractor: get paid.
Guidance, not tax advice. See also the cited invoice requirements by country.