CIS Invoice for Subcontractors: UK Format and Example (2026)

If you do construction work for another business in the UK, the contractor who pays you usually has to withhold tax from your invoice and send it to HMRC on your behalf. That is the Construction Industry Scheme (CIS). It does not change how much tax you owe overall, but it does change what your invoice needs to look like, because the contractor has to see exactly how much to deduct. Get the layout right and you get paid the correct amount first time; get it wrong and your invoice bounces back with questions.

What CIS is, in one paragraph

Under CIS, contractors deduct money from a subcontractor's payments and pass it to HMRC as an advance toward that subcontractor's tax and National Insurance. As a subcontractor you still send an invoice, but you show the deduction on it so the contractor pays you the net amount. At the end of the year the tax already deducted is set against your final bill, and if too much was withheld you claim it back. Registering for CIS is what gets you the lower deduction rate, so it is almost always worth doing.

The three deduction rates

How much the contractor withholds depends on your CIS status, which they check with HMRC by verifying your Unique Taxpayer Reference (UTR):

• 20% - registered subcontractor. The standard rate once you are registered under CIS. Applied to your labour charge.
• 30% - not registered. If you have not registered for CIS, or HMRC cannot verify you, the contractor must deduct 30%. This is the single best reason to register.
• 0% - gross payment status. Larger or well-established subcontractors can apply for gross payment status, which means no deduction at all - you invoice the full amount and settle your tax later.

The golden rule: the deduction is on labour only

This is where most CIS invoices go wrong. The CIS deduction applies to the labour element of your work, not to the whole invoice. According to HMRC's guidance for contractors on how to make deductions and pay subcontractors, the following are taken off the gross amount before the deduction is calculated:

• The cost of materials you supplied.
• VAT charged, if you are VAT registered.
• The cost of plant hire, fuel for that plant, and consumable stores in some cases.

In practice that means you split your invoice into labour and materials, then the contractor applies 20% (or 30%) only to the labour figure. If you lump everything into one line, the contractor cannot tell what to deduct and will send it back.

What to put on a CIS invoice

• Your business name exactly as registered for CIS, plus your address and contact details.
• Your UTR so the contractor can verify your status with HMRC.
• Your VAT number if you are VAT registered.
• An invoice number and date, as on any invoice.
• The contractor's details under a Bill To heading.
• Labour and materials listed separately, each with its own subtotal.
• The CIS deduction shown as its own line, for example 'Less CIS deduction (20% of labour): -240.00'.
• The net amount payable after the deduction - the figure the contractor will actually transfer.

A worked example

Say you are a registered subcontractor who did a week of first-fix carpentry and also supplied timber. Your invoice body might read:

• Labour: first-fix carpentry, 5 days x 200.00 = 1,000.00
• Materials: timber and fixings = 350.00
• Subtotal = 1,350.00
• Less CIS deduction (20% of 1,000.00 labour) = -200.00
• Net payable to you = 1,150.00

Notice the 20% was taken only from the 1,000.00 of labour, not from the 1,350.00 total. The contractor pays you 1,150.00 and sends the 200.00 to HMRC against your tax. If you were not registered, the deduction would be 30% of the labour (300.00) and your net would be 1,050.00 - the same work, 100.00 less in your pocket until you reclaim it.

What the contractor must give you back

When a contractor deducts CIS from your payment, they must give you a payment and deduction statement within 14 days of the end of each tax month (tax months end on the 5th). Keep these statements: they are your proof of tax already paid, and you use them when you file your Self Assessment or company return to reclaim any overpayment. If a contractor does not send one, chase it - without it you cannot easily prove the deduction.

CIS and the VAT reverse charge

If you are VAT registered and both you and the contractor are CIS registered, most business-to-business construction services fall under the domestic reverse charge for VAT, in force since 1 March 2021. That means you do not add VAT to the invoice; instead you state that the reverse charge applies and the contractor accounts for the VAT. Your invoice still shows the VAT rate and a note such as 'Reverse charge: customer to account for VAT to HMRC'. This is separate from the CIS deduction but often appears on the same invoice, so it is worth understanding both. For the wider picture see our guide to UK VAT invoice requirements and limited company invoice requirements.

Common CIS invoicing mistakes

• Deducting from the whole invoice. The deduction is on labour only - keep materials out of the calculation.
• Leaving off your UTR. Without it the contractor cannot verify you and may default to the 30% rate.
• Not registering for CIS. Registering moves you from 30% to 20% - a large cash-flow difference.
• Forgetting to chase your deduction statements. They are your evidence for reclaiming tax at year end.