Under the Construction Industry Scheme the contractor deducts tax from your labour before paying you. Here’s exactly how the numbers work — and how to get the invoice right first time.
19 July 2026 · 7 min read
If you subcontract in construction, the Construction Industry Scheme (CIS) changes what your invoice needs to show: the contractor must deduct tax from your labour before paying you, and your invoice should make the deduction and the "net to pay" figure unmissable. Get it wrong and you either get underpaid or create a mess at year-end.
20% if you're registered for CIS (most subbies), 30% if you're not registered — a strong reason to register — and 0% (gross payment status) if HMRC has approved you to be paid in full. The deduction isn't extra tax: it's an advance on your income tax and National Insurance, credited back at self-assessment.
The deduction applies to the labour element only. Materials you bought for the job (and certain other direct costs) are paid in full. That's why a CIS invoice must split labour and materials clearly — lump them together and the contractor may deduct from the whole amount.
Labour £800 + materials £300 = £1,100 invoiced. CIS at 20% applies to the £800 labour only: deduction £160. Net to pay: £940. If you're VAT registered, VAT is calculated on the full amount before the CIS deduction — and on many construction supplies the domestic reverse charge means you don't charge VAT at all (check with your accountant). Try your own numbers in the free CIS deduction calculator — or the multi-subbie version if you're the contractor paying several.
On GraftG's Pro plan, switch CIS on in settings with your rate, and every invoice you raise — from an accepted quote or a finished job — automatically shows the CIS deduction on the labour portion and the net-to-pay figure. The pay-now link (if you use one) charges the CIS-adjusted amount, so the contractor pays exactly the right number. See the CIS help guide and the CIS invoice app page.
Every deduction suffered is money already paid to HMRC on your behalf — you need the running total for self-assessment. GraftG stores the CIS amount on each invoice, so your deductions are tallied rather than scattered across a year of paperwork. The wider workflow is covered in how to send invoices via WhatsApp.
20% if you are registered under CIS, 30% if you are not registered, and 0% if you hold gross payment status. The deduction is an advance on your income tax and National Insurance, not an extra tax.
No. The deduction applies only to the labour element of your invoice. Materials you purchased for the job are paid in full, which is why a CIS invoice must show labour and materials as separate lines.
A clear split of labour and materials, the CIS deduction on the labour amount at your rate, and the net amount payable after deduction — alongside the normal invoice essentials like your business details, a unique invoice number, the date and VAT if applicable.
Yes. On GraftG’s Pro plan you enable CIS once in settings, and every invoice raised from a quote or job automatically shows the deduction on labour and the net-to-pay figure. It works through WhatsApp with no app to install.
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