CIS tax calculator

How CIS deductions work

Under the Construction Industry Scheme (CIS), a contractor takes a deduction from each payment to a subcontractor and pays it to HMRC as an advance towards the subcontractor's tax and National Insurance. The deduction is taken from the labour element only — you first take off the cost of qualifying materials, and you never deduct from VAT.

The three deduction rates are:

• 0% — gross payment status. The subcontractor is paid in full and settles their own tax through Self Assessment or Corporation Tax. HMRC grants this status to businesses that pass turnover and compliance tests.
• 20% — registered (verified). The standard rate once the contractor has verified the subcontractor with HMRC and they are registered for CIS.
• 30% — unregistered / not verified. Applied when the subcontractor isn't registered for CIS or can't be verified.

What counts as materials

Before applying the rate, the contractor takes off what the subcontractor genuinely paid for to do the job — not a notional figure. HMRC allows the actual, evidenced cost of materials, consumable stores, fuel (other than for travelling) and plant hire. The subcontractor should provide receipts; where there's no evidence, the contractor must make a reasonable estimate. You can't inflate materials to shrink the deduction — the materials figure has to reflect real cost.

Gross payment status in brief

Gross payment status lets a subcontractor be paid without any CIS deduction. To get it, the business has to pass a turnover test, a compliance test (tax and returns up to date) and a business test, and HMRC reviews the status periodically. With gross status the calculator shows a 0% deduction.

The VAT domestic reverse charge in brief

Since 1 March 2021, most construction services supplied between two VAT-registered, CIS-registered businesses use the VAT domestic reverse charge. The subcontractor does not charge VAT on the invoice; instead the contractor accounts for that VAT on its own VAT return (and usually reclaims it as input tax). The reverse charge doesn't apply where the customer is the end user (for example the building owner), where either party isn't VAT-registered, or for zero-rated work — in those cases VAT is added to the invoice as normal. Either way, the CIS deduction is always taken from the net labour, never from the VAT.

Keep the CIS statement

The contractor must give the subcontractor a payment and deduction statement for each tax month. That statement is how the subcontractor proves the deductions already taken and offsets them against their own tax and National Insurance bill — so keep every one.

Sources: HMRC guidance on the Construction Industry Scheme and the VAT domestic reverse charge for building and construction services. Rules verified against gov.uk on 6 June 2026.

This calculator gives estimates to help you understand a CIS payment — it isn't tax advice. Figures depend on correct verification, accurate materials evidence and your VAT position, so confirm anything you rely on with your accountant or current HMRC guidance.