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CIS Subcontractor Deduction Calculator
If you work in construction as a subcontractor, the contractor paying you must deduct CIS tax from the labour part of each invoice before it reaches you: 20% if you are registered for CIS, 30% if you are not, and 0% if you hold gross payment status. Materials you paid for are excluded from the deduction. Enter a typical monthly invoice below to see what lands in your account each month, what gets deducted over the year, and roughly how much of it comes back as a refund when your Self Assessment is filed.
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If you work in construction as a subcontractor, the contractor paying you must deduct CIS tax from the labour part of each invoice before it reaches you: 20% if you are registered for CIS, 30% if you are not, and 0% if you hold gross payment status. Materials you paid for are excluded from the deduction. Enter a typical monthly invoice below to see what lands in your account each month, what gets deducted over the year, and roughly how much of it comes back as a refund when your Self Assessment is filed.
The direct cost of materials you bought for the job. CIS is only deducted from the labour element, so materials come off before the rate is applied.
Your self-employed income minus all allowable expenses (tools, travel, materials, insurance). This drives the year-end tax comparison, not the CIS deduction itself.
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How CIS deductions work, with two worked examples
Under the Construction Industry Scheme, the contractor paying you acts as a tax collector. They split each invoice into labour and materials, apply the deduction rate to the labour element only, and pass the deducted amount to HMRC against your tax record. The rate depends on your status: 20% if you are registered as a CIS subcontractor, 30% if HMRC cannot verify you (usually because you have not registered), and 0% if you have been granted gross payment status.
The deduction is a payment on account of your tax, not the tax itself. Your real liability is worked out on your Self Assessment return: income tax and Class 4 National Insurance on your profit after expenses. Because CIS is deducted from turnover before any expenses are considered, the amount taken during the year is usually more than you actually owe, which is why CIS refunds are so common.
Worked example 1: a registered subcontractor invoices £4,000 a month, of which £800 is materials. The labour element is £3,200, so £640 is deducted each month and £3,360 is paid over. Across 12 months, £7,680 goes to HMRC. If their taxable profit for the year is £30,000, the actual liability is £3,486 income tax plus £1,045.80 Class 4 NIC, £4,531.80 in total. Filing the return produces a refund of £3,148.20.
Worked example 2: an unregistered subcontractor invoices £2,500 a month with £300 of materials. The labour element is £2,200, so the 30% rate takes £660 a month, leaving £1,840. Over 10 months of work, £6,600 is deducted. On a taxable profit of £18,000, the real liability is £1,086 income tax plus £325.80 Class 4 NIC, £1,411.80 in total, so £5,188.20 comes back as a refund. Registering for CIS would have cut the in-year deductions from £6,600 to £4,400, keeping £2,200 in their pocket during the year instead of waiting for HMRC.
This calculator is deliberately a quick estimate. For deeper CIS planning, including a full refund planner and contractor-side tools, our specialist construction site Trade Tax Specialists has a dedicated CIS toolset at tradetaxspecialists.co.uk/calculators.
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