Subcontractor CIS Calculator

CIS requires contractors to deduct tax at source from payments to subcontractors. Registered subcontractors have 20% deducted, unregistered have 30% deducted. Those with gross payment status receive the full amount. Deductions count as advance tax payments.

CIS deductions are only applied to the labour element of a payment, not the direct cost of materials. Materials must be listed separately on the invoice and the subcontractor must have actually paid for them — you cannot artificially inflate materials to reduce deductions. Per HMRC CIS340, the materials figure deducted from the gross payment is the VAT-exclusive (net) cost if the subcontractor is VAT-registered and can reclaim it, but the VAT-inclusive cost actually paid if the subcontractor is not VAT-registered.

You must apply to HMRC and meet three tests. Business test: you carry out construction work (or supply labour for it) in the UK through a bank account. Turnover test: net construction turnover (your construction income excluding VAT and the cost of materials) of at least £30,000 for a sole trader; for a partnership or company you can pass either the standard test — £30,000 per partner or director — or the alternative test of £100,000 for the whole business. Compliance test: up-to-date tax returns, CIS and (from 6 April 2024) VAT obligations for the past 12 months. Source: gov.uk CIS304 / CIS305 registration notes.

Yes. CIS deductions are advance payments of your income tax and NI. When you file your self-assessment tax return, CIS deductions are offset against your tax bill. If deductions exceed your tax liability, you can claim a refund from HMRC.

CIS covers most construction work including building, civil engineering, alterations, repairs, decorating, and demolition. It does NOT cover architecture, surveying, plant hire without an operator, or materials delivery only.