Use our free CIS tax deduction calculator to instantly estimate how much tax will be deducted from your invoice. This tool breaks down your labour element, VAT, and final take-home pay.
The calculator follows HMRC’s CIS rules to give you an accurate estimate:
Select your current CIS registration status:
Understanding exactly how your contractor arrives at your final payment is crucial. Here is the standard calculation logic used in the CIS scheme:
This is the portion of your payment relating purely to your work. CIS tax is only applied to this figure—never to your materials.
The contractor withholds this amount (usually 20%) and pays it directly to HMRC on your behalf as an advance on your income tax.
What you actually receive in your bank. If you are VAT-registered, remember you are still responsible for passing the VAT portion on to HMRC.
Here is a real-world walkthrough of how a contractor calculates your take-home pay when you invoice for both labour and materials.
Gross payment (£2,000) minus the cost of materials (£500). CIS tax is only applied to this labour portion.
20% deduction applied to the £1,500 labour element. This money is withheld and sent directly to HMRC by the contractor.
20% VAT applied to the full £2,000 gross payment. VAT is calculated independently and is never subjected to CIS deductions.
Gross (£2,000) minus CIS tax (£300) plus VAT (£400). You invoice the contractor for £2,400 total (Gross + VAT), but you receive £2,100 in your bank account.
No. Under HMRC rules, CIS tax is only deducted from the labour element of your invoice. Any costs for materials you purchased directly for the job are exempt from the deduction.
VAT is calculated separately on your gross invoice amount (labour plus materials). The CIS deduction is then calculated on the labour element. The VAT amount is added to your net payment in full—it is never reduced by the CIS deduction.
The standard rate is 20% for registered (verified) subcontractors. Unverified subcontractors are taxed at a higher rate of 30%. Some subcontractors with a strong compliance history can apply for Gross Payment Status, meaning a 0% deduction.
Disclaimer: This CIS Tax Deduction Calculator is intended for guidance only and does not constitute legal, financial, or tax advice. Actual deductions may vary depending on your contract terms, verification status, and HMRC guidance. For advice tailored to your circumstances, please consult a qualified accountant or tax adviser experienced in contractor tax law and the CIS scheme.