Key takeaways
- Under CIS you still send a normal invoice — a “CIS invoice” is just an invoice paid under the scheme.
- The deduction is taken by the contractor from your labour, at 20% (or 30% if you are not registered).
- Materials are not subject to the deduction — so show them separately.
- You receive a monthly CIS statement from each contractor; keep every one.
- Your gross pay, less the deduction, is what lands in your bank — you still report the gross income.
What CIS actually is
The Construction Industry Scheme is HMRC's way of collecting tax from construction work as it is paid. If you take on construction work for a contractor, the contractor does not pay you your full invoice — they deduct a percentage from the labour element and pass it to HMRC on your behalf.
The important thing to understand is that this changes how you are paid, not the invoice you send. There is no special “CIS invoice” document to produce. You send a normal invoice for the work; the contractor applies the deduction when they pay it. What matters is that your invoice makes the split between labour and materials unmistakable, because that split determines what gets deducted.
What the deduction applies to
Labour is deducted from
Your labour — the time you charged for — is the part the contractor deducts CIS tax from. The rate is 20% if you are registered for CIS, or 30% if you are not registered, or if the contractor cannot verify you.
Materials are paid in full
Materials you supplied and recharged are not subject to the CIS deduction — the contractor pays those in full. This is exactly why labour and materials belong on separate invoice lines: if they are lumped together, there is no way to apply the deduction correctly, and the query comes straight back to you.
VAT sits outside the deduction
If you are VAT-registered, the deduction applies to the labour element excluding VAT. The contractor accounts for the VAT separately. Do not let anyone deduct a percentage from your VAT-inclusive total.
The monthly CIS statement
Each month a contractor pays you under CIS, they must give you a written statement showing the gross amount, the deduction and the net paid. This statement is the evidence that tax was already taken from your pay — you need it when you complete your Self Assessment, so that the CIS tax already deducted is credited against your bill.
Keep every statement. If one goes missing, ask the contractor for a replacement — without it, you may end up paying tax twice, once through CIS and again through your return.
Registering and being verified
To have the lower 20% rate applied, you need to be registered for CIS as a subcontractor, and the contractor needs to verify you with HMRC. If you are not registered, or the contractor cannot verify you, the deduction rises to 30%. Registration is separate from VAT registration — you can be registered for one and not the other.
What to put on the invoice itself
Keep it a normal, clear invoice:
- Your name, trading name and address, and the contractor's name and address.
- A unique invoice number, the invoice date and the period the work covers.
- The job, site or purchase order reference the contractor gave you.
- Labour and materials on separate lines, so the deduction can be calculated on the labour only.
- Your VAT number and rate if you are VAT-registered.
- The total, and your payment details.
Our independent contractor invoice template keeps labour and materials on separate lines with a job reference built in — the structure the scheme needs.
Bill contract work cleanly
Itemise labour and materials with a job or PO reference — free, no sign-up.
Frequently asked questions
What is a CIS invoice?
There is no special document called a CIS invoice. You send a normal invoice for the work; if the job falls under the Construction Industry Scheme, the contractor deducts CIS tax from the labour element when they pay you and gives you a monthly statement.
How much is the CIS deduction?
20% of the labour element if you are registered for CIS and the contractor has verified you, or 30% if you are not registered or cannot be verified. Materials are not subject to the deduction.
Do materials get deducted under CIS?
No. Materials you supply and recharge are paid in full. Only the labour element is subject to the CIS deduction, which is why labour and materials should be itemised separately on the invoice.
Is VAT deducted under CIS?
No. The deduction applies to the labour excluding VAT. If you are VAT-registered, the VAT is accounted for separately and should not have a percentage taken from it.
What is a CIS statement?
A written statement a contractor must give you each month showing your gross pay, the CIS deduction and the net amount paid. Keep every statement — it proves the tax already deducted and is credited against your Self Assessment.
Free invoice tools
General guidance only — not legal, tax or accounting advice. Rules and rates can change; check HMRC's current guidance for the latest. Last reviewed 8 October 2026.