Work out a CIS deduction
Change the numbers. The deduction comes off the labour element only, at the payer’s verified rate.
Deduction applies to the labour element only. Materials are never deducted from.
Illustration only, not tax advice. Verify a subcontractor’s status with HMRC before you pay — unverified is 30% and you cannot recover the difference by re-issuing later.
Go on — tick something.
What's included
Per payment, not per job
The deduction applies to the labour element of each payment as it is made. A 30% deposit does not attract 20% of the whole job's labour.
Labour and materials split
Every stage raises separate labour and materials lines, so the deduction lands on the right half without special-casing.
All three rates
Gross at 0%, net at 20%, unverified at 30%, applied to the subcontractor as HMRC verified them.
VAT domestic reverse charge
Applied where the supply qualifies, with the wording the invoice is required to carry.
Visible on the invoice
The deduction is shown as a line the subcontractor can reconcile, not folded silently into a total.
Refuses rather than guesses
If the contract value cannot be established, a staged invoice will not be raised. A nil invoice raised quietly is the worst outcome on a money feature.
CIS & VAT Reverse Charge for Construction — your questions
Why does per payment versus per job matter?
Because getting it wrong is an HMRC error in a direction that hurts someone. Over-deduct and the subcontractor is short and reclaiming; under-deduct and the contractor carries the shortfall. It is taken on the labour inside each payment, not once on the whole contract.
Do you file my CIS return?
No. ServicePay calculates and records the deduction and shows it on the invoice. Filing remains between you and HMRC or your accountant.
What about the reverse charge?
Where the supply is within the scope of the domestic reverse charge for construction, the invoice is prepared on that basis with the required wording, and the VAT is not charged to the customer.
How do I know which CIS rate applies?
Verify the subcontractor with HMRC. Gross is 0%, registered is 20%, unverified is 30%. If you are not sure, verify before you pay — you cannot recover the difference later by re-issuing.
Is CIS deducted from materials?
No. The deduction applies to the labour element only, which is why every payment splits into labour and materials from the contract split you set. A single undifferentiated line has no labour figure to deduct from.
When does the domestic reverse charge apply?
When the customer is both VAT registered and CIS registered and the work is a construction service. It does not apply to an end user — a domestic householder is not in the CIS chain.
Not sure how it all fits together?
See CIS & VAT Reverse Charge for Construction alongside everything else
A guided tour of the whole product — the quoting and invoicing everyone has, and the register, the tags, the compliance board and the CIS handling that only we do. No sign-up, no card, about four minutes.