CIS applies to labour, not materials — and at a rate that depends on your registration status. Most “wrong” deductions are one of those two things.
22 August 2026 · 4 min read
Construction Industry Scheme deductions confuse almost everyone at first. Two rules explain most apparent errors.
The deduction applies to the labour element. Materials, plant hire and VAT are excluded. If your deduction looks too big, check whether materials have been included in the labour figure — splitting them clearly on the invoice prevents this.
Registered subcontractors are generally deducted at 20%; unregistered at 30%; those with gross payment status have nothing deducted. If you are being deducted 30% and believe you are registered, verify your registration — the contractor verifies you with HMRC and applies whatever that returns.
CIS covers construction work between contractors and subcontractors. Work direct for a private householder is generally outside it. If a domestic customer is deducting CIS, something is wrong.
Run the numbers through the free CIS deduction calculator before disputing anything — it takes a minute and tells you whether the figure is actually wrong.
Show labour and materials as separate lines with the CIS deduction and net payable clearly stated. CIS invoices explained covers the layout; GraftG's Pro plan applies the deduction for you.
No. CIS applies to the labour element only — materials, plant hire and VAT are excluded. If materials are not itemised separately on the invoice, a contractor may deduct against the whole amount, which is why the split matters.
That is the rate for subcontractors who are not registered under CIS, or whose verification with HMRC failed. Check your registration status — once verified as registered, the rate should drop to 20%.
Keep reading