How the CIS deduction is calculated
HMRC's rates are 20% for registered subcontractors, 30% for unregistered subcontractors and 0% with gross payment status (GOV.UK: make deductions and pay subcontractors). The contractor starts from your invoice total and takes off VAT and what you paid for materials, consumable stores, fuel and plant hire, then deducts the rate from what's left. On this invoice that means:
CIS deduction = rate × labour lines
Amount payable = net total + VAT charged − CIS deduction
Not sure the scheme covers your work? GOV.UK explains who is in it and how it works (GOV.UK: what is the Construction Industry Scheme).
Keep receipts for materials: the contractor can ask for evidence, and estimates the cost if you have none. The deduction counts towards your tax and National Insurance bill (GOV.UK: what you must do as a CIS subcontractor). Your contractor sends you a payment and deduction statement each tax month.
VAT and the domestic reverse charge
Since 1 March 2021 most building and construction services reported under CIS between VAT-registered businesses use the domestic reverse charge (GOV.UK: when you must use the VAT domestic reverse charge). You don't add VAT to the total; the customer accounts for it to HMRC. Your invoice still shows the VAT amount and says the reverse charge applies (GOV.UK: VAT reverse charge technical guide, invoices).
It doesn't apply when the customer is an end user or intermediary supplier who has told you so in writing, when the customer isn't VAT registered (for example a homeowner), or when you aren't VAT registered. In those cases untick the reverse charge box.
This is a calculator, not tax advice. If you're not sure which rate or VAT treatment applies, check with HMRC or your accountant.
CIS invoice questions
Is the CIS deduction taken from materials?
No. HMRC says the contractor deducts CIS from the payment after taking off VAT and what the subcontractor paid for materials, consumable stores, fuel and plant hire. This tool applies the rate to the labour lines only.
Which CIS rate should I put on my invoice?
The one HMRC gave your contractor when they verified you: 20% if you're registered for CIS, 30% if you're not, or 0% if you have gross payment status.
When does the VAT domestic reverse charge apply?
Usually when you're VAT registered, your customer is VAT registered and reports the payment under CIS, the service is standard- or reduced-rated, and the customer hasn't told you in writing that they're an end user or intermediary supplier.
What wording does a reverse charge invoice need?
HMRC's guidance says it must refer to the reverse charge, state the VAT the customer must account for, and not include that VAT in the amount charged. This tool prints: "Reverse charge: customer to pay the VAT to HMRC. VAT Act 1994 Section 55A applies."