Free tool
CIS deduction calculator
Work out what to deduct from a subcontractor's invoice, and what they actually get paid. The deduction comes off the labour only, which is where most people get it wrong.
The invoice
Taken off before the deduction
Leave anything at nought if it does not apply.
Only materials they bought themselves. Ask for the receipts, and estimate if there are none.
Equipment hired in for this job, not their own kit.
Things used up on the job, and fuel other than travelling.
Their CIS status
Verify every subcontractor with HMRC before you pay them. If they are not verified, the 30% rate is the one that applies.
Deduct and pay to HMRC
£330.00
Pay the subcontractor
£2,070.00
How that was worked out
What this does not do
It works out one payment under the rules on HMRC’s own page, and nothing more. It does not verify anyone’s status, file a monthly return, produce the statement you owe your subcontractor, or account for the CITB levy, which HMRC’s list of deductible amounts does not mention.
It is a calculator, not tax advice. Check the current rules at gov.uk and ask your accountant about your own position.
The bit people get wrong
The deduction is not a percentage of the invoice. It is a percentage of what is left after you have taken off the VAT and everything the subcontractor spent rather than earned. Deduct from the whole invoice and you have taken too much, which is their money and your problem.
Comes off first
VAT. Consumable stores. Fuel, except for travelling. Plant hired in for the job. Manufacturing or prefabricating. Materials, but only where the subcontractor paid for them.
Stays in
Their labour, and anything else that is payment for work rather than reimbursement of what they spent. Travel fuel stays in.
Which rate
20% for a registered subcontractor, 30% for one who is not registered or not verified, and nothing at all for one with gross payment status.
Belo does the rest of the paperwork too
It answers the calls you miss, drafts the quote off your own prices, raises the invoice and chases the money, with you approving anything that goes to a customer.