CIS invoicing for UK trades: a no-nonsense guide

If you sub-contract under the Construction Industry Scheme (CIS), getting your invoices right is the difference between getting paid on time and chasing payments for weeks. This guide walks through exactly how CIS deductions work on a typical UK sub-contract invoice, with worked numbers, the HMRC rules behind them, and the mistakes we see trip up otherwise experienced trades.

What CIS actually deducts CIS deductions apply to the **labour** portion of your invoice — never to materials, plant hire, fuel, CITB levy or VAT. The standard rate is 20% for subcontractors registered with HMRC, 30% for unregistered subcontractors, and 0% for those with gross payment status.

The contractor (not you) is legally responsible for making the deduction, paying it over to HMRC, and issuing you a monthly CIS payment and deduction statement (often called a CIS voucher). You keep these to offset against your own tax bill at year end.

A worked example Imagine a kitchen install with the following lines:

• Labour: £1,000
• Materials: £300
• VAT (20% on £1,300): £260
• Gross invoice total: £1,560
• CIS deduction (20% on £1,000 labour only): −£200
• Net payable to you: £1,360

Note the deduction is calculated on the **labour element only**, never the VAT, never the materials. Get this wrong on either side and HMRC will eventually catch it.

Materials: what actually counts HMRC's definition of "materials" is tighter than most people think. It includes:

• Goods physically incorporated into the works (tiles, copper, timber, cable)
• Direct consumables used on the job (sealant, fixings)
• Plant and tool hire from a third party
• Fuel for plant (not for travel)

It does NOT include your own van fuel, mileage, or general overhead. If in doubt, itemise — vague "materials and sundries" lines invite disputes.

The four mistakes we see most - Deducting CIS from the VAT-inclusive total instead of the labour-only figure - Bundling labour and materials into one line so the contractor over-deducts - Missing your UTR or verification number from the invoice header - Not reconciling monthly CIS statements against actual bank deposits

How TradeMatrix handles this TradeMatrix splits labour and materials automatically on every invoice, tags CIS deduction lines, stores monthly statements against the customer record, and produces a year-end CIS deduction report you can hand straight to your accountant. End-of-year reconciliation takes minutes, not days.

For more on speeding up the rest of your billing cycle, read our [quote to cash in under 7 days](/blog/quote-to-cash-under-7-days) playbook.