The deduction, step by step
Your contractor starts with the gross total of your invoice, takes off VAT and the materials you paid for, and applies the rate to what is left. In the example:
- gross: labour £1,400, materials £180 and travel fuel £40, so £1,620
- less the materials you paid for: £1,620 minus £180 leaves £1,440
- CIS deduction at 20%: £288
- net due from your contractor: £1,332
Mark each line as labour, materials or expense and the template does the sum. Check any figure with the CIS calculator.
Sources: gov.uk: making CIS deductions, CIS 340
What the deduction is never taken from
- VAT
- materials you paid for directly
- consumable stores
- plant hired for the job
- manufacturing or prefabricating materials
- fuel, except fuel for travelling
Travel fuel, accommodation and other expenses paid to you are part of the gross, and the deduction is taken from them just like labour (CIS 340, example D2). Not VAT registered? Materials come off at the full price you paid, VAT included. VAT registered? They come off at the price before VAT.
Keep the receipts and list materials on their own lines: your contractor may ask for evidence, and without it they will estimate the cost of the materials themselves.
Sources: gov.uk: CIS subcontractors, get paid, gov.uk: making CIS deductions, CIS 340, Appendix D
Your rate and your UTR
The deduction is 20% if you are registered for CIS and your contractor can verify you, 30% if not, and nothing with gross payment status.
To verify you, your contractor uses your UTR and the exact name you registered under, with your National Insurance number if you are a sole trader, or the company name, company UTR and company number for a limited company. The details must match your registration exactly, so use your registered name under From and put your UTR in the notes.
Sources: gov.uk: CIS subcontractors, get paid, gov.uk: verify subcontractors
VAT and the reverse charge
If you and your contractor are both VAT registered and the work is reported under CIS, the domestic reverse charge usually applies. Your invoice shows the VAT but does not charge it, says “Reverse charge: Customer to pay the VAT to HMRC”, and leaves that VAT out of the total. Switch on VAT registered under From, then Reverse charge applies under Bill to.
It does not apply when the contractor has told you in writing that it is an end user or intermediary supplier, to zero-rated work, or where the reverse charge part of a supply is 5% or less of its whole value, and it never applies to a customer who is not VAT registered. VAT stays out of the CIS sum either way: in the example, a VAT-registered bricklayer would show £324 of reverse charge VAT and still be paid £1,332.
Sources: HMRC VATREVCON37100, VAT reverse charge technical guide
Your payment and deduction statement
Your contractor pays the deduction to HMRC and gives you a payment and deduction statement within 14 days of the end of each tax month: for the month 6 May to 5 June, by 19 June. It shows the gross amount paid, the materials that reduced the deduction and the deduction itself, so check it against your invoices.
Invoicing monthly to the tax month, the 6th to the 5th, makes the two easy to match.
Sources: gov.uk: making CIS deductions, HMRC CISR72060
Rules checked against the official sources linked above on 19 October 2026. Example prices are illustrative. This is general guidance, not legal or tax advice.