What is CIS and who does it apply to?

The Construction Industry Scheme (CIS) requires contractors to deduct money from subcontractor payments and pass it to HMRC. The standard deduction is 20% for registered subcontractors and 30% for unregistered ones. CIS applies to labour costs only, not materials.

How does VAT work on construction invoices?

Most construction work is charged at the standard 20% VAT rate. However, some work qualifies for the reduced 5% rate (e.g., renovating empty dwellings, converting commercial to residential). New-build residential is zero-rated (0%). Always check with your accountant for the correct rate.

What is retention on a construction invoice?

Retention is a percentage (typically 3-5%) withheld from each payment as security against defects. Half is usually released at practical completion and the remainder after the defects liability period (typically 12 months). It is calculated on the net value before VAT.

What payment terms are standard in UK construction?

Under the Housing Grants, Construction and Regeneration Act 1996, the default payment period is 17 days for interim payments and 30 days for final payments. Many commercial contracts use 30 or 60 days. The Construction Act gives you the right to suspend work for non-payment after giving notice.

What are preliminary costs on a construction invoice?

Preliminary costs (prelims) cover site setup, management, welfare facilities, temporary services, plant, scaffolding, skips, site security, and insurance. They typically represent 8-15% of the contract value and are usually invoiced proportionally across interim valuations.

TradeCalculator.co.uk

Construction Invoice Calculator

Calculate construction invoices with labour, materials, VAT and CIS deductions

Labour Cost

Materials Cost

VAT Rate

CIS Registered

How We Calculate This

Enter your labour and materials costs along with the applicable VAT rate. If you are CIS registered, toggle CIS on and the calculator deducts the appropriate percentage from the labour element only. Add any preliminary costs, plant hire, and subcontractor costs. The calculator works out the subtotal, VAT, CIS deduction, retention held, and the net amount payable with the payment due date.