# CIS deduction calculator: what the contractor keeps and what you get paid > Work out the CIS deduction on a subcontractor invoice at 20%, 30% or gross, with materials and VAT left out and the reverse charge shown properly. - Page to cite: https://aeolookup.com/trades/cis-deduction-calculator/ - Publisher: AEO Lookup (https://aeolookup.com/) - Section: Trades and building firms, Rules and paperwork - Published 1 October 2026 - Key fact: We ran one £3,800 invoice (£3,000 labour, £800 materials) through every CIS status; a registered subcontractor is paid £3,200, an unregistered one £2,900, a gross one £3,800, and under the reverse charge none of the £760 VAT changes hands. - Sources: GOV.UK "What you must do as a CIS contractor: make deductions and pay subcontractors" and "VAT reverse charge technical guide", read 2026-10-01; our test run is saved in tests/gaffer/tools-check.txt. Under the Construction Industry Scheme (CIS), a contractor takes a slice of what it pays a subcontractor and sends it to HMRC as an advance on the subcontractor's tax. The slice is only taken from labour, and VAT sits outside it completely. That is simple to say and easy to get wrong on a real invoice, so here is a calculator. **Free tool on the page:** CIS deduction calculator. It runs in the browser at https://aeolookup.com/trades/cis-deduction-calculator/#tool and asks for no sign-up. ## The three rates GOV.UK sets out three deduction rates: - **20%** if the subcontractor is registered for CIS. - **30%** if they are not registered. The contractor still has to deduct; it just takes more. - **0%** if the subcontractor has gross payment status, which they apply to HMRC for and must keep qualifying for. The contractor checks which rate applies by verifying the subcontractor with HMRC before the first payment. ## What the deduction is taken from The deduction comes off the labour part of the invoice only. Before working it out, the contractor takes away: - VAT; - materials the subcontractor paid for directly; - equipment that is used up on the job (consumables); - fuel, except fuel for travelling; - plant hired for the job; - the cost of making or prefabricating materials. This is why a CIS invoice should split labour from materials. If it does not, the contractor has no way to tell what the materials cost and may take the deduction from the whole amount. On our example that would be £760 at 20% instead of £600: £160 of your money sitting with HMRC until your tax return. ## Where the VAT reverse charge comes in If you are VAT registered and you invoice a contractor for work that falls under CIS, the domestic reverse charge usually applies. You do not charge the contractor VAT. Instead the invoice shows the VAT that would have been due, says the reverse charge applies (HMRC's suggested wording is "Customer to pay the VAT to HMRC"), and the contractor accounts for the VAT itself. It does not apply when you invoice the end user (the client who is having the building work done and is not passing it on), or an intermediary connected to them, if they have told you in writing that they are one. Then you charge VAT the normal way. It also never applies to householders. Whatever the VAT treatment, the CIS deduction is never taken from VAT. ## Worked example Our test invoice: £3,000 of labour and £800 of materials the subcontractor bought, with VAT at 20%. | Status | Deduction | Paid to subcontractor (reverse charge) | |---|---|---| | Registered, 20% | £600 | £3,200 | | Not registered, 30% | £900 | £2,900 | | Gross payment, 0% | £0 | £3,800 | The VAT of £760 does not change hands under the reverse charge; the contractor accounts for it. If the contractor were an end user paying normal VAT, the registered subcontractor would receive £3,960: the £3,800 less £600, plus £760 VAT. The gap between registered and unregistered is £300 on a single invoice of this size. If you subcontract under CIS and have not registered, that alone is a reason to do it. ## Deadlines that go with it The contractor must give you a payment and deduction statement within 14 days of the end of each tax month (tax months end on the 5th), and file its monthly return by the 19th. Our guide to [the CIS monthly return and what a late one costs](https://aeolookup.com/trades/cis-monthly-return-19th-late-penalties/) covers the penalties. Keep your statements: the deductions are what you claim back against your tax bill, or against PAYE if you run a limited company. To put this on paper, the [invoice maker for trades](https://aeolookup.com/trades/invoice-template-electricians-builders-uk/) splits labour and materials, prints the reverse charge wording and shows the CIS deduction, so the contractor has no reason to get it wrong. If you are close to the VAT threshold, our [rolling 12 months VAT guide](https://aeolookup.com/trades/vat-registration-rolling-12-months-tradesperson/) shows how to check. This is general information, not tax advice. If you are unsure whether a job falls under CIS or the reverse charge, check with HMRC or your accountant before you invoice. ## Short answers from this page **How much CIS is deducted from a subcontractor's invoice?** 20% if the subcontractor is registered for CIS, 30% if not, and nothing if they have gross payment status. The deduction is taken from labour only, not materials or VAT. On a £3,800 invoice made up of £3,000 labour and £800 materials, a registered subcontractor is paid £3,200, an unregistered one £2,900 and a gross one £3,800. --- ![](https://aeolookup.com/img/d/owner-line.png) Overlyft: https://overlyft.com/ General information for UK small firms, not legal, tax or financial advice.