CIS Deduction Calculator
Work out the Construction Industry Scheme deduction on a subcontractor payment for the 2025-26 tax year. Enter the labour and materials split and choose the subcontractor's CIS status — the calculator returns the deduction to pay HMRC and the net amount payable to the subcontractor.
How to use this CIS calculator
Pick the subcontractor's CIS status — registered (net) for a verified subcontractor deducted at 20%, unregistered / unverified for the 30% rate, or gross payment status where no deduction is made. Enter the labour charge and, separately, the genuine cost of materials. The deduction is only ever applied to the labour element — materials and VAT are excluded.
The calculator shows the CIS rate, the deduction you must pay over to HMRC, and the net amount to pay the subcontractor, plus a full payment breakdown. Always verify a subcontractor with HMRC before the first payment so you apply the right rate, and keep the deduction figure ready for your monthly CIS return.
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Frequently asked questions
- How is the CIS deduction calculated?
- Under the Construction Industry Scheme, the contractor deducts a percentage from the labour element of a subcontractor's payment and pays it to HMRC. The rate is 20% for registered (verified "net") subcontractors and 30% for those who are unregistered or unverified. The cost of genuine materials and any VAT are excluded before the rate is applied. Subcontractors with gross payment status have nothing deducted.
- What counts as materials I can exclude from the deduction?
- Only the actual cost of materials the subcontractor bought to do the work — for example timber, fixings, plant hire, fuel for plant, and consumables. The figure must be the genuine direct cost (not marked up). If the materials cost looks inflated, HMRC can challenge it and require the deduction to be applied to the higher amount. Travel and subsistence are not materials.
- When do I have to pay the deduction to HMRC and file the return?
- CIS deductions for a tax month (6th to the 5th) must reach HMRC by the 22nd of that month if you pay electronically (19th if by post). You also file a monthly CIS return by the 19th reporting every subcontractor you paid, and you must give each subcontractor a payment and deduction statement within 14 days of the tax-month end.
- What is gross payment status and how does a subcontractor get it?
- Gross payment status lets a subcontractor be paid in full with no CIS deduction; they then pay their own tax through Self Assessment or Corporation Tax. To qualify, the business must pass HMRC's turnover test (broadly £30,000 of labour per partner/director), a compliance test (tax affairs up to date), and a business test (construction work run through a bank account in the UK).
- Do I need to verify a subcontractor before paying them?
- Yes. As a contractor you must verify each new subcontractor with HMRC before the first payment. Verification tells you whether to pay them gross, deduct 20%, or deduct 30%. If you do not verify, you must apply the 30% unmatched rate. HelloBooks stores each subcontractor's verification result so the correct rate is applied automatically.