UK CONSTRUCTION

How to write a CIS invoice

Under the Construction Industry Scheme, the contractor paying you holds back part of the labour payment and sends it to HMRC. Your invoice should make that easy to check.

The three CIS rates

20% — you are registered for CIS.
30% — you are not registered.
0% — you have gross payment status.

The contractor checks which rate applies to you with HMRC. Your invoice shows the deduction so both sides agree the net amount.

CIS comes off labour only

The deduction applies to the labour part of the payment. It does not apply to VAT, or to materials you bought for the job. Other costs, such as plant hire, can also be excluded. That is why the labour and materials must be shown separately.

Worked example

Labour£1,100.00

Materials£385.00

Gross£1,485.00

CIS at 20% of labour−£220.00

Payable to you£1,265.00

The £220 is not lost — it is paid to HMRC on your behalf and counts towards your tax and National Insurance bill.

What to put on the invoice

Your name, address and UTR (Unique Taxpayer Reference)
Your VAT number, if you are VAT registered
The contractor's name and address
An invoice number, invoice date and site or plot reference
Labour and materials as separate amounts
The CIS rate, the deduction and the amount payable

Reverse charge VAT

If you are VAT registered and supply construction services to another VAT-registered business in CIS that is not the end user, the domestic reverse charge usually applies. You show the VAT rate and amount, but you do not add it to the total. Add a note such as: Reverse charge: customer to pay the VAT to HMRC.

In the generator, choose the United Kingdom and turn on Domestic reverse charge. The wording is added for you.

Keep your statements

The contractor must give you a payment and deduction statement each month. Keep these with your invoices — you need them for your Self Assessment return or to reclaim deductions through your company's payroll.

Common questions

Do I add VAT to a CIS invoice?

If you are VAT registered and the domestic reverse charge applies, you show the VAT but do not charge it — your customer accounts for it. If the reverse charge does not apply (for example, your customer is the end user), you charge VAT as normal.

What if the contractor uses a different CIS rate?

The contractor verifies your status with HMRC and must use the rate HMRC gives them. If their rate differs from yours, check your registration with HMRC before arguing about the invoice.

Is travel subject to CIS?

Travel and subsistence you charge for are generally treated as part of the labour payment. Check HMRC guidance CIS340 for your situation.

General information, not tax advice. CIS rules change — check HMRC's guide CIS340 on GOV.UK or ask an accountant. See also the CIS invoice template.