CIS deduction calculator
Updated
Under the Construction Industry Scheme, a contractor deducts 20% from a registered subcontractor's labour, 30% if they are not registered, and nothing if they hold gross payment status. Materials are not deducted from. The deductions count towards your tax for the year, so you may get some back.
Not financial advice. General information using HMRC rates for the current tax year (2026-27); your position may differ.
The cost of materials you bought for the job. No deduction is made on this part.
Used to estimate the year's total deductions.
Turnover less all business expenses, including the materials. Used to estimate income tax and Class 4 National Insurance.
If the year's deductions are more than your tax bill.
If your tax bill is more than the deductions.
Not financial advice. General information using HMRC rates for the 2026-27 tax year; your position may differ. Reviewed 30 October 2026.
Your invoice
- Labour paid to you£80053%
- Materials paid to you£50033%
- CIS deduction£20013%
The year: deducted against tax due
- Covered by deductions£3,23281%
- Balance to pay£00%
- Refund£76819%
Worked example
A registered subcontractor invoices £1,500, of which £500 is materials. The contractor deducts 20% of the £1,000 labour, £200, and pays £1,300. Over 20 such invoices, £4,000 is deducted; on a profit of £25,000 the income tax and Class 4 National Insurance come to about £3,232, so roughly £768 would come back after the tax return.
How it works
- The deduction is worked out on the invoice less VAT and less the cost of materials you supplied.
- The rate depends on your status with HMRC: 20% if registered, 30% if not, nothing with gross payment status.
- The contractor pays the deduction to HMRC and gives you a monthly statement. Keep every statement.
- On your Self Assessment return, the year's deductions are set against your income tax and Class 4 National Insurance. If they are more, HMRC refunds the difference.
Why registering matters
An unregistered subcontractor has 30% taken from the labour part of every invoice instead of 20%. The money is not lost, because it counts towards the year's tax, but it is held by HMRC until the return is filed, which can be well over a year later. Registering with HMRC as a CIS subcontractor is free.
How the deductions offset your tax
The CIS deduction is an advance payment of tax, not an extra tax. At the end of the year you file a Self Assessment return showing your turnover, your expenses and the total deducted. HMRC works out your income tax and Class 4 National Insurance on the profit and takes off the deductions. Because the deduction is taken from turnover but tax is charged on profit, and the first part of profit is covered by the personal allowance, many subcontractors are owed a refund.
Gross payment status
With gross payment status, contractors pay you in full and you pay all your tax through Self Assessment. To qualify you must pass business, turnover and compliance tests: broadly, construction turnover (net of materials) above HMRC's minimum, paid through a business bank account, with your tax affairs up to date. HMRC's guidance on gross payment status sets out the current figures.
What this does not cover
VAT and the domestic reverse charge for construction services, which change how VAT is handled but not the CIS deduction itself; limited company subcontractors, who reclaim deductions through payroll rather than Self Assessment; payments on account; and the CITB levy.
CIS deduction rates
| Subcontractor status | Deduction on labour |
|---|---|
| Registered for payment under deduction | 20% |
| Not registered | 30% |
| Gross payment status | 0% |
Source: Finance Act 2004 s61; The Finance Act 2004, Section 61(2), (Relevant Percentage) Order 2007 (SI 2007/46); HMRC CIS340. No deduction is made on VAT or on the direct cost of materials.
Want this worked out on your real numbers?
This page works on the figures you type. CoreFi can track your income, spending and tax position from the accounts you connect, on the same HMRC rates. It does not give tax advice.
Track your own numbersFrequently asked questions
How is the CIS deduction calculated?
Take the invoice total, remove VAT and the cost of materials you supplied, and apply the rate: 20% if you are registered, 30% if not.
Will I get my CIS deductions back?
They count towards your income tax and Class 4 National Insurance for the year. If the total deducted is more than your bill, HMRC refunds the difference after you file your Self Assessment return.
Is CIS deducted from materials?
No. Only the labour part of the payment is subject to deduction, so list materials separately on the invoice.
Is this financial advice?
No. It is general information using HMRC rates for the current tax year, and your position may differ. The year-end figure is an estimate on the profit you enter.
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Not financial advice. This calculator gives general information using HMRC rates and thresholds for the 2026-27 tax year. It is not tax, legal or financial advice and does not take account of your circumstances; for advice, speak to a qualified accountant or tax adviser. CoreFi is a trading name of JG Core Ltd (company 16218779). Figures reviewed 30 October 2026.