CIS Deductions Calculator 2026/27
Updated for the 2026/27tax year · Last updated
Enter the gross payment and materials cost to calculate the CIS deduction and net payment you receive. Select 20% for registered subcontractors, 30% for unregistered, or 0% if you hold gross payment status from HMRC.
The Construction Industry Scheme (CIS) is a withholding tax system that requires contractors to deduct money from payments to subcontractors and send those deductions directly to HMRC. The deductions are not an additional tax — they are advance payments of the subcontractor’s income tax and National Insurance for the year. At the end of the tax year, the total deducted is credited against the subcontractor’s Self Assessment bill. If more was deducted than owed, HMRC refunds the balance.
There are three CIS rates. Subcontractors registered for CIS are deducted at 20% of the labour element of their payment. Unregistered subcontractors face a 30% deduction — a penalty rate designed to encourage registration. Subcontractors who have applied for and received gross payment status are paid in full with no CIS deduction; they settle their own tax via Self Assessment. Gross payment status requires a clean tax compliance history and is reviewed annually by HMRC.
A common mistake is applying the CIS deduction to the full invoice amount. CIS only applies to the labour element — materials costs incorporated into the works are explicitly excluded. Always itemise your invoices clearly, separating labour from materials, to ensure the deduction is calculated correctly. If materials are not separated, the contractor may (incorrectly) deduct CIS on the full amount.
Net payment
£8,000.00
CIS deduction
£2,000.00
| Gross payment | £10,000.00 |
| Labour element | £10,000.00 |
| CIS deduction (20%) | − £2,000.00 |
| Net payment | £8,000.00 |
CIS deductions are credited against your Self Assessment tax bill. Keep your CIS statements (HMRC form CIS132) as evidence.
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How this calculator works
The calculator applies the CIS deduction rules as specified by HMRC:
Labour element: The gross payment minus materials costs. Only this net labour figure is subject to CIS deduction. Materials that are incorporated into the works (bricks, pipes, timber, etc.) are excluded. Tools, plant hire, and scaffolding hired to the site are generally treated as materials for CIS purposes and are also excluded.
CIS deduction: Labour element × deduction rate (20% or 30%). This amount is withheld by the contractor and paid to HMRC on the monthly CIS return. The contractor must provide you with a payment and deduction statement (previously called a CIS132 voucher) for each payment.
Net payment: Gross payment minus the CIS deduction. This is the amount you receive from the contractor. Note that VAT (if you are VAT-registered) is applied to the gross invoice and is not subject to CIS deduction — so if you are VAT-registered, you receive the net payment plus VAT in full.
Annual reclaim: At the end of the tax year, total your CIS deductions from all contractors (check your deduction statements and your HMRC online account). Declare this total on your Self Assessment return. If the deductions exceed your income tax and NI liability, HMRC refunds the difference — usually within 2–4 weeks of filing.