Labour vs Materials (CIS)

Short Definition: Only labour is subject to CIS deductions, not materials.

Long Definition: Under CIS, deductions apply only to the labour portion of a subcontractor’s invoice. The cost of materials, equipment hire, and VAT (if applicable) must be excluded before calculating the deduction. Getting this wrong is common and can lead to over-deduction, affecting subcontractor cash flow and causing disputes between contractors and subcontractors.