CIS deduction
How much CIS will be deducted?
The contractor holds back 20% or 30% before they pay you — but only from the labour, not from the materials you bought. Split the invoice and see what actually lands in the bank.
Your invoice
Figures before VAT. VAT never counts towards the deduction.
Your time on site. This is the only part the deduction touches.
Materials you paid for yourself, plant hire, consumable stores, and fuel used on the job — but not fuel for travelling.
Rates and the materials rule checked against GOV.UK on 31 August 2026.
A worked example
A £2,800 invoice made up of £2,000 labour and £800 of materials, at the registered 20% rate. The deduction is £400 — a fifth of the labour — so £2,400 is paid. Run the rate across the whole £2,800 and you would get £560, which is £160 of your own money sitting with HMRC until the end of the year for no reason.
Materials are the bit that gets missed
GOV.UK is specific about what comes off before the rate is applied: VAT, consumable stores, fuel used on the job except for travelling, plant hire, and materials you paid for directly. Everything on that list is yours already — you have bought it once and you are being reimbursed, so there is no income there to deduct tax from.
Which means the split on the invoice does the work. One line reading “kitchen rewire, £2,800” gives the contractor nothing to work from, and a cautious one will deduct from the lot. Two lines — labour and materials, priced separately — and the deduction comes out right without a phone call. Keep the receipts; a contractor is entitled to ask for evidence of what you paid.
It is not a tax bill
The money that disappears off your invoice has not gone. HMRC holds it as an advance payment against the tax and National Insurance you will owe, and it comes off the bill when you file. Sole traders claim it on the Self Assessment return; a limited company sets it against the PAYE it pays over. If the deductions come to more than the tax due, the difference is refunded.
It is worth saying plainly because the arithmetic feels like a 20% pay cut when you are looking at the remittance. It is not. It is timing.
20% or 30%?
30% is the rate for subcontractors HMRC cannot match to a CIS registration when the contractor verifies them. Registering moves you to 20%, and it is the same ten-percent gap on every invoice you raise, so it pays for the phone call quickly. Gross payment status — nothing deducted at all — has turnover and compliance tests to pass, and is worth asking about once the business is established enough to meet them.
What this calculator does not cover
It answers one question — what comes off this invoice. It is not the contractor's side of CIS: no monthly return, no verification, no subcontractor records. And if you are VAT registered and billing another construction business, the domestic reverse charge usually applies on top, which means you charge no VAT at all and say so on the invoice. That is a separate rule from this one, and both can be true of the same job.
grafter.ly does this split on the invoice itself — labour and materials as separate lines, the deduction worked out from the labour, and the reverse-charge wording added when it applies. How CIS works on an invoice.
Get the split right on the invoice.
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