CIS Invoicing Guide for Subcontractors
Everything you need to know about creating compliant CIS invoices as a construction subcontractor in the UK.
What is CIS?
The Construction Industry Scheme (CIS) is a tax deduction scheme that applies to payments from contractors to subcontractors in the construction industry. Under CIS, contractors must deduct money from subcontractor payments and pass it to HMRC.
CIS Deduction Rates
What Must a CIS Invoice Include?
A CIS invoice must contain all the standard invoice requirements plus specific CIS information:
Standard Invoice Requirements
- Your business name and address
- Customer's name and address
- Unique invoice number
- Invoice date and due date
- Description of work performed
- Amounts for each item
- VAT details (if VAT registered)
Additional CIS Requirements
- Your UTR (Unique Taxpayer Reference) – 10-digit number from HMRC
- Labour and materials breakdown – CIS only applies to labour
- CIS deduction calculation – Showing the amount to be deducted
- Net payment amount – What you'll actually receive
What Counts as Labour vs Materials?
This is crucial because CIS deductions only apply to labour costs, not materials.
Subject to CIS (Labour)
- • Construction work
- • Repairs and decorating
- • Alterations and conversions
- • Civil engineering work
- • Installation of systems
- • Site preparation
- • Demolition work
Exempt from CIS
- • Materials you supply
- • Plant and equipment hire
- • Prefabricated materials
- • Scaffolding
- • Architecture and surveying
- • Delivery charges
- • Fuel costs
CIS Invoice Example
Here's an example of how to break down a CIS invoice:
How to Register for CIS
- Register as a subcontractor with HMRC online or by phone
- Provide your UTR and National Insurance number
- Wait for verification – HMRC will verify you with contractors
- Consider Gross Payment Status if you meet the criteria
Gross Payment Status Requirements
To qualify for 0% deductions, you must meet all these tests:
- Business test – work in construction in the UK
- Turnover test – minimum £30,000 annual turnover (excluding materials)
- Compliance test – good record with HMRC
Common CIS Invoice Mistakes
- Not separating labour and materials – Results in overpayment of CIS
- Missing UTR number – Contractor may apply 30% rate
- Incorrect calculations – Can cause payment disputes
- Not updating registration – May lead to wrong deduction rate
Create CIS Invoices Automatically
Experi automatically calculates CIS deductions, separates labour from materials, and generates compliant CIS invoices. Set up your UTR once and every invoice is correct.
Frequently Asked Questions
Can I invoice without CIS deductions?
Only if you have Gross Payment Status (0% rate). Otherwise, you must show the CIS deduction on your invoice – the contractor will deduct it before paying you.
What if the contractor deducts too much?
CIS deductions count as advance payments toward your tax bill. Any overpayment will be refunded or offset when you file your tax return.
Do I add VAT before or after CIS deduction?
VAT is calculated on the full amount (labour + materials) before CIS deduction. CIS deduction is then calculated on the labour portion only.