CIS Deduction Calculator (2026/27): How to Work Out 20% & 30% HMRC Subcontractor Tax

Short answer: A cis deduction calculator works out your net subcontractor payout in three steps: start with the gross invoice subtotal (excluding VAT), subtract the direct cost of materials, consumable stores, fuel, and plant hire that you paid for directly, and multiply the remaining CIS-liable labour by 20% (for an HMRC-registered subcontractor), 30% (for an unregistered subcontractor), or 0% if you hold Gross Payment Status. The main contractor sends that CIS deduction to HMRC toward your tax bill and pays you 80% of your labour plus 100% of your materials.

⚡ Instant UK CIS (20% / 30%) Labour vs Material Split & SA103S Box 38 Refund Calculator (£GBP): Work out your net CIS payout and annual HMRC Self Assessment refund in the interactive GBP CIS & SA103 Tax Calculator right below, save your first 5 CIS invoices or Screwfix receipts in the iCloud Web Workspace (5 Free Saves), explore the UK Self Assessment SA103 Edition and UK Sole Trader & VAT Edition, or Download Keel Free on the App Store (£0/mo).

Under the HM Revenue & Customs (HMRC) Construction Industry Scheme (CIS340), CIS deductions apply only to the labour and profit element of construction work — never to VAT and never to the actual cost of materials you purchased for the job. However, if you fail to separate labour and materials onto distinct line items on your invoice, the contractor is legally required to deduct 20% (or 30%) from the entire invoice total.

For related UK construction and sole trader guides, see our UK CIS Subcontractor Invoice Guide, UK CIS Subcontractor Invoice Template, UK Domestic Reverse Charge VAT Construction Guide, and UK Self Assessment for the Self-Employed.

How does a CIS deduction calculator work out 20%, 30%, and 0% Gross Payment Status?

Before making a first payment to any subcontractor, the main contractor must verify your 10-digit Unique Taxpayer Reference (UTR) and National Insurance number (or Company Registration Number) with HMRC’s CIS verification service. HMRC returns one of three deduction rates:

HMRC Verification Status	CIS Deduction Rate on Labour	Deduction on Materials & Plant Hire	Net Payout Formula (Excl. VAT)
Registered Subcontractor (Standard Rate)	20% (Labour × 0.20)	0% (Paid 100% gross)	(Labour × 0.80) + Materials
Unregistered / Unverified Subcontractor	30% (Labour × 0.30)	0% (Paid 100% gross)	(Labour × 0.70) + Materials
Gross Payment Status (GPS)	0% (£0 deducted at source)	0% (Paid 100% gross)	100% of Labour + 100% of Materials

Suppose you are a CIS-registered carpenter or electrician billing a main contractor for a first-fix installation:

1. Gross Labour (CIS-Liable): £2,000.00
2. Direct Cost of Materials & Plant Hire (CIS-Exempt): £650.00 (timber, cable, fixings, and hire of a tower scaffold)
3. Gross Invoice Total (Excl. VAT): £2,650.00
4. 20% CIS Deduction (on £2,000.00 Labour only): £2,000.00 × 0.20 = £400.00 (withheld by the contractor and paid to HMRC on your monthly CIS Payment and Deduction Statement)
5. Net Bank Transfer Paid to You: (£2,000.00 − £400.00) + £650.00 = £2,250.00

If you had sent a single lump-sum invoice for £2,650.00 without itemising materials, the contractor would have deducted 20% on the full £2,650.00 (£530.00 instead of £400.00), leaving you £130.00 out of pocket until you file your annual tax return.

What are the 20% and 30% CIS deductions on common UK subcontractor invoice totals?

Use this lookup table to check any weekly, fortnightly, or monthly CIS payment certificate against your invoice:

CIS Labour Amount	Materials & Plant Hire	Gross Invoice (Excl. VAT)	20% CIS Deduction (Registered)	Net Payout at 20% CIS	30% CIS Deduction (Unregistered)	Net Payout at 30% CIS
£500.00	£0.00	£500.00	£100.00	£400.00	£150.00	£350.00
£750.00	£150.00	£900.00	£150.00	£750.00	£225.00	£675.00
£1,000.00	£250.00	£1,250.00	£200.00	£1,050.00	£300.00	£950.00
£1,500.00	£400.00	£1,900.00	£300.00	£1,600.00	£450.00	£1,450.00
£2,000.00	£650.00	£2,650.00	£400.00	£2,250.00	£600.00	£2,050.00
£3,000.00	£1,100.00	£4,100.00	£600.00	£3,500.00	£900.00	£3,200.00
£5,000.00	£2,000.00	£7,000.00	£1,000.00	£6,000.00	£1,500.00	£5,500.00

What counts as CIS-exempt materials vs CIS-liable labour under HMRC CIS340?

Under HMRC CIS340 guidance on materials, the main contractor is only allowed to exempt the direct cost you actually paid for materials and hired plant — not a profit markup on materials, and not equipment that you own yourself.

Item on Your Subcontractor Invoice	CIS Treatment	Rule to Follow on Your Invoice
Skilled or unskilled labour, day rates, and call-out fees	CIS-Liable (20% / 30%)	Group under “CIS Labour”
Travel time, mileage, and overnight accommodation	CIS-Liable (20% / 30%)	HMRC treats travel & subsistence billed to the contractor as part of the labour charge (claim the expense on your own Self Assessment return instead)
Building materials, timber, pipework, cable, fixings, and consumables	0% CIS (Paid 100% Gross)	Bill at actual cost paid (including VAT if you are not VAT-registered) and keep your Travis Perkins / Screwfix / Jewson receipt
Markup on materials	CIS-Liable (20% / 30%)	Put any profit margin into your Labour line; only the actual supplier cost is exempt from CIS
Plant, scaffolding, skip hire, or mini-digger hired from a third party	0% CIS (Paid 100% Gross)	Exempt from CIS when hired specifically for the job from an external hire company
Charge for using your own van, tools, or subcontractor-owned digger	CIS-Liable (20% / 30%)	HMRC rules state that plant owned by the subcontractor is subject to CIS deduction

How does CIS work alongside 20% VAT and Domestic Reverse Charge VAT?

If you are VAT-registered (mandatory once your rolling 12-month taxable turnover exceeds £90,000), two rules govern how VAT and CIS interact on your invoice:

1. CIS is always calculated on the net amount excluding VAT. VAT never alters the 20% or 30% CIS deduction.
2. Domestic Reverse Charge VAT (Section 55A VATA 1994): When both you and the main contractor are VAT-registered and CIS-registered — and the main contractor is not an “end user” (such as a homeowner or property developer keeping the building) — you do not add 20% cash VAT to the invoice total. Instead, you display the 20% reverse charge rate and the mandatory notice:

   “Reverse charge: Value Added Tax Act 1994 Section 55A applies — customer to account for the VAT to HMRC at 20%.”

For a complete side-by-side comparison of Standard VAT vs Domestic Reverse Charge VAT with CIS, read our UK Domestic Reverse Charge VAT Construction Guide.

Do you owe more tax after 20% CIS, or are you due an HMRC CIS tax refund?

Because a 20% CIS deduction is withheld from your gross labour revenue before business expenses and before your £12,570 Personal Allowance, most sole-trader subcontractors who have 20% deducted all year have overpaid their income tax and Class 4 National Insurance.

Consider a sole-trader CIS subcontractor earning £42,000 in gross CIS labour during the 2026/27 tax year:

• 20% CIS already deducted at source by contractors: £42,000 × 20% = £8,400.00 already sitting with HMRC.
• Deductible business expenses (van mileage at 45p/mile, tools, PPE, public liability insurance, phone): £8,500.00
• Taxable net profit: £42,000 − £8,500 = £33,500.00
• Personal Allowance (0% tax): First £12,570.00
• Taxable band (£33,500 − £12,570 = £20,930):
  • 20% Income Tax: £20,930 × 20% = £4,186.00
  • 6% Class 4 National Insurance: £20,930 × 6% = £1,255.80
  • Total Income Tax + Class 4 NI Bill: £5,441.80
• HMRC CIS Tax Refund Due Back to You: £8,400.00 already paid − £5,441.80 owed = +£2,958.20 tax rebate!

Every legitimate tool receipt and business mile you log increases your CIS tax rebate by 26p for every £1.00 spent (20% Income Tax + 6% Class 4 NI) — or 42p per £1.00 once your profit exceeds £50,270. See our UK Self-Employed Mileage Allowance Guide and UK Sole Trader Allowable Expenses List for every deductible category.

How does Keel automate CIS invoices, monthly statements & HMRC tax rebate tracking?

Stop losing 20% on materials or hunting for faded Screwfix receipts in April:

1. Instant Labour vs Materials Split: Use the interactive GBP CIS Invoice Generator at the top of this page or in Keel on iPhone to separate CIS Labour (20% / 30%) from CIS-Exempt Materials (0%) and display your UTR and Reverse Charge VAT notice automatically.
2. On-Site Receipt & 45p Mileage Capture: Snap a photo of every builders’ merchant receipt and log every site-to-site van trip so your materials exemption and annual CIS tax rebate are audit-proof.
3. 100% On-Device Privacy (No Open Banking Required): Keel works offline on site and never asks for your business bank login.

👉 Download Keel for UK CIS Subcontractors on the App Store or generate your next CIS invoice in our UK CIS Subcontractor Invoice Template.

Frequently asked questions

How do I calculate a 20% CIS deduction on an invoice with materials?

Subtract the direct cost of materials and third-party plant hire from the net invoice total (excluding VAT), then multiply only the remaining labour amount by 0.20 (20%). Your net payout from the contractor is 80% of your labour plus 100% of your materials. For example, on £1,500 labour + £400 materials, the 20% CIS deduction is £300 (£1,500 × 0.20), and you receive £1,600 (£1,200 + £400).

Is CIS deducted before or after VAT?

CIS is always calculated before VAT on the net labour amount. Neither standard 20% VAT nor Domestic Reverse Charge VAT is ever included in the CIS deduction calculation, so your CIS deduction remains identical whether or not you are VAT-registered.

What is the difference between 20% and 30% CIS tax?

Subcontractors who have registered with HMRC for the Construction Industry Scheme using their 10-digit UTR number have 20% deducted from their labour payments (or 0% if approved for Gross Payment Status). Subcontractors who have not registered with HMRC — or whose details cannot be matched when the contractor verifies them — must have 30% deducted from their labour payments until they register.

How do I claim back overpaid CIS deductions from HMRC?

Sole-trader subcontractors claim back overpaid CIS deductions on their annual HMRC Self Assessment tax return by entering the total CIS deductions from their monthly Payment and Deduction Statements in the CIS deductions box on the SA103S or SA103F self-employment pages. Limited company subcontractors offset CIS deductions suffered against their monthly PAYE, NIC, and CIS liabilities via an Employer Payment Summary (EPS).

How do I qualify for 0% CIS Gross Payment Status (GPS) in the UK?

To qualify for 0% Gross Payment Status with HMRC, you must run a construction business in the UK via a bank account, have net construction turnover (excluding VAT and the cost of materials) of at least £30,000 per year as a sole trader (or £30,000 per partner/director, or £100,000 total for a company), and pass HMRC’s compliance test by filing and paying your tax returns on time over the past 12 months.

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