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CIS Deduction Calculator

Calculate Construction Industry Scheme deductions for subcontractor payments. Enter the gross payment, materials cost, and CIS status to see the deduction and net payment.

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£

CIS deductions only apply to the labour portion, not materials.

Deduction breakdown

Gross payment£1000.00
Less materials−£200.00
Labour (deductible amount)£800.00
CIS deduction (20%)−£160.00
Subcontractor receives£840.00
You pay HMRC£160.00

⚠️ Remember

  • • You must verify every subcontractor with HMRC before first payment
  • • CIS returns must be filed monthly by the 19th
  • • Subcontractors can reclaim deductions through their tax return
  • • Materials must be evidenced — keep receipts and invoices

Muster automates CIS for you

Verify subcontractors, calculate deductions, generate payment statements, and file monthly returns — all from one platform.

See how it works

How CIS deductions work

Under the Construction Industry Scheme (CIS), contractors must deduct tax from payments to subcontractors and pass it to HMRC. The deduction rate depends on the subcontractor's CIS status:

  • 20% deduction — for subcontractors registered with HMRC for CIS
  • 30% deduction — for subcontractors not registered for CIS
  • 0% (gross payment) — for subcontractors approved by HMRC for gross payment status

Deductions are only applied to the labour portion of the payment. Materials costs, equipment hire, and VAT are excluded from the deduction calculation.

Frequently asked questions

Who needs to operate CIS?▾

Any business that pays subcontractors for construction work must register as a CIS contractor with HMRC and make deductions from payments. This includes builders, plumbers, electricians, roofers, and most trade businesses that use subcontractors.

Are materials deducted under CIS?▾

No. CIS deductions only apply to the labour element of the payment. If a subcontractor provides materials, these should be listed separately on the invoice and excluded from the deduction calculation.

How do subcontractors get their money back?▾

CIS deductions are advance payments of tax. Subcontractors can offset them against their income tax and National Insurance through their Self Assessment tax return, or claim a refund if they've overpaid.

When do I file CIS returns?▾

Monthly, by the 19th of each month following the tax month. Tax months run from the 6th to the 5th. Late filing incurs a £100 penalty.