CIS deduction calculator — 20% and 30% rates

How do CIS deductions work?

Under the Construction Industry Scheme, contractors deduct tax from subcontractors' payments and pay it to HMRC. The deduction applies to the labour element only — materials, equipment hire and VAT are not subject to CIS. The standard rate is 20% for verified subcontractors, 30% for unverified, and 0% for those with gross payment status.

What does a CIS deduction look like?

A subcontractor invoices £1,000 labour and £400 materials. At 20%, the CIS deduction is £1,000 × 20% = £200. The contractor pays the subcontractor £1,200 (£1,000 - £200 + £400) and sends £200 to HMRC. The subcontractor offsets the £200 against their own tax bill.

What are common CIS mistakes?

Deducting CIS from materials (wrong — labour only). Deducting CIS from VAT (wrong — the deduction is calculated on the net labour amount before VAT). Forgetting to verify the subcontractor with HMRC (always verify — you are liable if you apply the wrong rate).

Can GraftG handle CIS automatically?

GraftG (Pro plan, £24/month) handles CIS on both sides. As a subcontractor, your invoices show the deduction automatically. As a contractor, text "CIS invoice John, labour £800, materials £300" and get a payment & deduction statement PDF. CIS REPORT gives you tax-year totals.

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