CIS Deduction Calculator
Work out the Construction Industry Scheme deduction on a subcontractor invoice. Pick your registration status, enter the labour and materials breakdown, and see the deduction, net pay, and what HMRC keeps.
CIS rates and materials carve-out from gov.uk/what-you-must-do-as-a-cis-subcontractor. Reverse charge VAT may apply for B2B construction services — check with your accountant.
Projected MTD Liability Offset (2026/27)
Live annual view: your projected Income Tax + Class 4 NIC liability against the CIS already deducted at source. Tells you whether you're heading for a refund or a balance owed at year-end, and whether HMRC will require Payments on Account. Uses your subcontractor status above for the CIS rate.
2026/27 standard Personal Allowance £12,570, tapering £1 per £2 of profit above £100,000 (fully gone at £125,140 — producing the 62% effective marginal trap). Class 4 NIC: 6% between £12,570 and £50,270, 2% above. POA trigger follows gov.uk's "more than 80% paid at source" exemption verbatim. Excludes Scottish income tax, student loans, child-benefit clawback and other personal adjustments — speak to your accountant for your actual return.
Snap your subcontractor invoices, keep CIS records straight
PocketReceipt scans your invoices, separates labour from materials, and exports HMRC-aligned summaries — so the labour figure you put through CIS is always backed by evidence.
How CIS deductions work
Under the Construction Industry Scheme, contractors deduct money from a subcontractor's payment and pass it to HMRC as advance tax and National Insurance. Three rates:
- 20% — standard rate for verified, registered subcontractors
- 30% — higher rate for unverified or unregistered subcontractors
- 0% — Gross Payment Status (GPS) for subcontractors who pass HMRC's turnover, business and compliance tests
The deduction applies to labour only. Materials genuinely supplied by the subcontractor are excluded — but the breakdown must be reasonable, not inflated. HMRC challenges suspicious materials splits.
What counts as "materials"
Per HMRC guidance, materials means physical items supplied for the job: building materials, fuel for plant, equipment hire, consumables. It does NOT include the subcontractor's own travel, tools, training, mobile phone, or accommodation — those stay in the labour element and have CIS deducted.
VAT and the CIS deduction
VAT is charged separately on the invoice and is not subject to CIS deduction. From 1 March 2021, the domestic reverse charge for construction means VAT-registered subcontractors invoicing other VAT-registered businesses do NOT add VAT — the contractor accounts for it themselves. The calculator above lets you toggle between standard 20% VAT and reverse-charge (zero VAT shown) using the VAT field.
How to claim back over-deducted CIS
For sole traders, the deductions sit as advance tax payments. They're set off against your Self Assessment tax bill at the end of the tax year — and if they exceed your liability, HMRC refunds the difference. Keep every CIS payment and deduction statement (CIS25 for sole traders) safe — the dashboard / PocketReceipt can store these alongside your scanned invoices.
The MTD ITSA Liability Offset (2026/27)
Most CIS subcontractors find their year-end position swings between "balance owed" and "refund due" depending on profit, expenses, and the rate at which CIS was deducted. The offset calculator above does the live annual math — labour − expenses gives your taxable profit, the five-band engine applies the right Income Tax and Class 4 NIC rates, and the CIS already deducted at source is credited against the total. The output is either a projected balance to pay or an estimated refund.
The five bands used in the calculation (2026/27)
| Profit band | Income Tax | Class 4 NIC | Marginal rate |
|---|---|---|---|
| £0 – £12,570 | 0% | 0% | 0% |
| £12,571 – £50,270 | 20% | 6% | 26% |
| £50,271 – £100,000 | 40% | 2% | 42% |
| £100,001 – £125,140 | 40% + PA taper | 2% | 62% effective |
| £125,141 + | 45% | 2% | 47% |
The 62% Personal Allowance trap
Between £100,000 and £125,140 of profit, HMRC reduces your Personal Allowance by £1 for every £2 of profit above £100,000. The Personal Allowance is fully gone at £125,140. The income previously sheltered by the allowance is now taxed at the higher rate — so every additional £1 of profit in this band loses 40p of tax on that pound and 20p of tax on the matching half-pound of newly-taxable allowance, plus 2p of Class 4 NIC. Effective marginal rate: 62%. The calculator handles this automatically, but it's the explanation when you see a sharper jump in the £100k–£125k slice than you expect.
Payments on Account — the 80% rule that protects CIS workers
Under standard Self Assessment, HMRC requires Payments on Account if your residual tax bill is £1,000 or more. The exemption that matters for CIS subcontractors is the "more than 80% paid at source" rule: if your CIS deductions covered more than 80% of your total Income Tax + Class 4 NIC liability, HMRC waives the Payments on Account requirement. The offset calculator flags the warning only when the residual is at least £1,000 and CIS at source covers 80% or less — matching the gov.uk wording exactly.