CIS Tax Deduction Calculator
Use this calculator to calculate necessary tax deductions at 20% or 30% rates. Instantly get an estimate of how much tax will be deducted from your payments under the Construction Industry Scheme (CIS).
Calculate CIS Tax Deductions
How this calculator works
This calculator is designed to reflect how deductions are applied under the UK Construction Industry Scheme (CIS).
Under CIS, contractors are required to deduct tax before paying subcontractors. However, this deduction is not applied to the full invoice value.
Instead, tax is calculated only on the labour portion, after excluding allowable material costs.
The calculation follows a simple structure:
- Start with your gross payment (excluding VAT)
- Deduct the cost of materials
- Apply the relevant CIS rate (20%, 30%, or 0%)
- Add VAT back where applicable
This gives you a clear estimate of your take-home amount.
What CIS tax deduction means
CIS deductions are advance payments towards your tax and National Insurance.
They are not a final tax bill.
The rate applied depends on your registration status with HMRC:
- 20% — if you are registered and verified
- 30% — if you are not registered or cannot be verified
- 0% (gross status) — if you have approval to receive payments without deductions
If you are deducted at 20% or 30%, you can usually reclaim or offset this when you submit your tax return.
Worked example of CIS tax deduction calculation
To make this clearer, here is a simple example.
If:
- Your gross payment is £1,000
- Your materials cost is £200
Then:
- Labour element = £800
- CIS deduction at 20% = £160
- Net payment (excluding VAT) = £840
If VAT applies, this is added on top of the net amount.
This is exactly the logic used in the calculator above.
What counts as materials in CIS
Only certain costs can be deducted before CIS is applied.
These typically include:
- Building materials used directly for the job
- Consumables directly related to the work
They do not include:
- Labour
- Equipment hire (in most cases)
- Administrative or business costs
Getting this wrong is one of the most common reasons contractors overpay tax.
Common CIS mistakes contractors make
Many subcontractors misunderstand how CIS works, which can lead to incorrect expectations or cash flow issues.
Some of the most common mistakes include:
- Assuming tax is deducted from the full invoice
- Including VAT in CIS calculations
- Incorrectly claiming materials
- Not registering with HMRC and being taxed at 30%
This calculator helps avoid these issues by applying the correct logic automatically.
Frequently Asked Questions
No. CIS is only applied to the labour portion of your payment. Materials are excluded before the deduction is calculated.
20% applies to subcontractors who are registered and verified with HMRC. 30% applies if you are not registered or cannot be verified.
Yes. CIS deductions are advance payments towards your tax and National Insurance. You can offset or reclaim them when you submit your tax return.
No. CIS is calculated before VAT. VAT is added after the deduction has been applied.
Disclaimer: This tool offers an estimated result based on standard CIS guidelines. Actual deductions may differ depending on your specific circumstances.