CIS invoice template: how subcontractors invoice under CIS

If you work as a subcontractor in construction, your contractor probably pays you less than your invoice says. Under the Construction Industry Scheme (CIS), the contractor takes a deduction from your payment and pays it to HMRC. Your invoice should make that deduction clear, so both of you agree on the net amount before the money moves.

This guide covers the CIS rates, what the deduction applies to (and what it doesn't), how to lay out a CIS invoice, worked examples with and without VAT, and how to record the payment when it arrives. The free invoice generator adds the deduction line for you.

CIS deduction rates

Your contractor deducts at the rate that applies to you. Putting the same rate on your invoice means your figures and theirs match, and there's no argument about the net amount.

Labour vs materials

The deduction applies to the labour part of your invoice only. It leaves out:

• VAT — never included in the deduction;
• materials you paid for;
• consumables;
• plant hire;
• materials used in manufacturing or prefabrication;
• the CITB levy, insurance and admin charges.

So split your invoice lines into labour and materials. If you lump everything together, the contractor may deduct from the whole amount. In Invoice Native, mark each line as Labour (the default) or Materials. Delivery or shipping counts as materials.

How to lay out a CIS invoice

HMRC doesn't prescribe a CIS invoice format. The common layout is:

1. Your normal invoice lines, with labour and materials shown separately.
2. The invoice total (including VAT if you charge it).
3. "Less CIS deduction @ 20% on labour", with the amount.
4. The net amount payable.
5. Your UTR (Unique Taxpayer Reference, 10 digits).

Invoice Native prints this below the totals as "Labour £X · Materials £Y", "Less CIS deduction @ 20% on labour", "Net amount payable" and your UTR.

Worked example: not VAT registered

A plasterer bills a contractor for one job:

The contractor pays £1,200 and passes £200 to HMRC for you. The £400 of materials is not touched.

Worked example: VAT registered, charging VAT

The same job, from a subcontractor who is VAT registered and charges 20% VAT:

The deduction is still £200, because VAT is never part of it.

When the reverse charge applies too

Many VAT-registered subcontractors also fall under the construction domestic reverse charge. When it applies, you show the VAT but don't charge it — the contractor pays it to HMRC instead. On the same job, the invoice total is £1,400, the £280 is shown as VAT the customer accounts for, and the net amount payable after the £200 CIS deduction is £1,200. Our reverse charge guide explains when this applies and the wording to use.

Rounding the deduction

The CIS guidance we have read doesn't say how to round a deduction that falls between pennies. Invoice Native rounds it down to the penny, so it never takes more than the rate allows. On £333.33 of labour at 20%, that's £66.66.

Recording the net payment

When the contractor pays, you receive the net amount, not the invoice total. To keep your books straight:

• record the money received (the net amount) against the invoice;
• record the CIS deduction against the same invoice, so it shows as fully paid;
• keep the statements your contractor gives you showing what they deducted.

Over the tax year (6 April to 5 April), add up the deductions per contractor and check them against those statements, so you know exactly how much was paid to HMRC in your name.

Common mistakes

• Deducting from materials or VAT. Only labour is subject to CIS.
• Not separating labour and materials, which can lead to a bigger deduction.
• Changing the invoice total to the net amount. The total stays the same; the deduction comes off below it.
• Leaving off your UTR, which makes it harder for the contractor to match you.

Checklist

• ✅ Labour and materials on separate lines
• ✅ Invoice total unchanged, VAT shown if you charge it
• ✅ "Less CIS deduction @ 20% on labour" (or 30% / 0%)
• ✅ Net amount payable
• ✅ Your 10-digit UTR