CIS Tax Deduction Calculator UK 2025

Calculate CIS deductions for subcontractor payments in the UK construction industry. Supports registered (20%), unregistered (30%), and gross payment status with labour and materials breakdown.

The Construction Industry Scheme (CIS) requires contractors to deduct tax at source from payments to subcontractors. The standard deduction rate is 20% for registered subcontractors and 30% for those who are not registered. Subcontractors with gross payment status receive the full amount without deduction.

A critical distinction under CIS is that deductions apply only to the labour element of a payment, not to materials. If a subcontractor invoices £10,000 comprising £7,000 labour and £3,000 materials, the 20% deduction is calculated on the £7,000 only, resulting in a £1,400 deduction rather than £2,000. Contractors must verify subcontractors with HMRC before each payment and submit monthly CIS returns by the 19th of each month.

HMRC processed 3.2 million CIS deduction statements in 2022/23, with total deductions exceeding £6.8 billion (HMRC Construction Industry Scheme Statistics, 2024). This calculator applies the correct deduction rate to your labour and materials split and shows the net payment due to the subcontractor.

How to calculate CIS deductions

  1. Enter the total invoice value and split between labour and materials
  2. Select the subcontractor's CIS registration status
  3. The calculator applies the correct deduction rate to the labour portion
  4. See the deduction amount, net payment, and what to report on your CIS return

Written by the CalcStack team · Last updated March 2026

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Frequently asked questions

What is CIS (Construction Industry Scheme)?▾
The Construction Industry Scheme (CIS) is a HMRC scheme that requires contractors in the construction industry to deduct tax at source from payments made to subcontractors. The deducted tax is paid to HMRC and counts towards the subcontractors tax and National Insurance liability.
What are the CIS deduction rates?▾
There are three CIS deduction rates: 20% for subcontractors who are registered with CIS, 30% for subcontractors who are not registered, and 0% for those with gross payment status. The deduction is applied to the labour element only, not to materials.
Do CIS deductions apply to materials?▾
No. CIS deductions are only made on the labour element of a payment. If a subcontractor supplies materials as part of the work, the cost of those materials should be excluded from the amount subject to CIS deduction. Materials must be separately itemised on the invoice.
How do I register for CIS as a subcontractor?▾
You can register for CIS online through your HMRC Government Gateway account or by calling the CIS helpline. You will need your UTR (Unique Taxpayer Reference) and National Insurance number. Registration reduces your deduction rate from 30% to 20%.
What is gross payment status?▾
Gross payment status means no CIS deductions are made from your payments. To qualify, you must meet three tests: a business test (you run a construction business in the UK), a turnover test (your net construction turnover exceeds £30,000 per year or £30,000 per partner), and a compliance test (you have met all tax obligations on time).
When does a contractor need to register for CIS?▾
A contractor must register for CIS if they pay subcontractors for construction work averaging more than £1 million per year over a three-year period, or if they are a construction business themselves. This includes developers, property companies, and government bodies.
How do I submit a CIS monthly return?▾
CIS monthly returns must be submitted to HMRC by the 19th of each month. They cover the tax month (6th to 5th). Returns can be submitted online through HMRC or via payroll software. You must report all payments to subcontractors and any deductions made.
Can I reclaim CIS deductions?▾
Yes. If you are a subcontractor who also employs people, CIS deductions suffered can be offset against your PAYE and NIC liabilities. If you are a sole trader or partner, the deductions are offset against your self-assessment tax bill. Any excess can be reclaimed from HMRC.
What happens if I do not verify a subcontractor?▾
If you fail to verify a subcontractor with HMRC before making payment, you must apply the higher 30% deduction rate regardless of their registration status. Verification can be done online or by phone and confirms the correct deduction rate to apply.
Does CIS apply to all construction work?▾
CIS applies to most construction operations including building, civil engineering, demolition, repairs, decorating, and installation of heating, lighting, and power systems. It does not apply to professional services (architects, surveyors), delivery of materials, or work on your own home.

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© 2026 CalcStack — a Flavoureak UK Ltd product. CIS rates are based on 2024/25 HMRC published rates. This calculator provides estimates only and is not tax advice. Always verify deductions with HMRC or your accountant.