What is the CIS deduction on this invoice?

Take the invoice total excluding VAT, subtract the materials the subcontractor actually paid for, and apply the rate to what is left. On a £2,000 invoice with £500 of materials, the labour element is £1,500, so a registered subcontractor at 20% has £300 deducted and is paid £1,700. The £300 goes to HMRC.

No, and this is the mistake that costs money. The deduction applies to the labour element only — materials the subcontractor paid for, plant hire and consumables are excluded. Applying the percentage to the whole invoice over-deducts on every job with materials on it, and the subcontractor is the one financing that error until it unwinds.

Three of them: 20% for a subcontractor registered with the scheme, 30% where they are not registered or you could not verify them, and 0% where they hold gross payment status. Which one applies is not the subcontractor’s word for it — verify each one with HMRC before the first payment, because an unverified subcontractor is a 30% case regardless of what they tell you.

No. CIS is calculated on the net figure, so work from the invoice total excluding VAT. Separately, most construction supplies between VAT-registered businesses now fall under the domestic reverse charge, which changes who accounts for the VAT but does not change the CIS arithmetic.

Deductions are reported and paid monthly, alongside your CIS return, and you must give the subcontractor a statement showing what was deducted. Deadlines and penalties are HMRC’s and they do apply — this calculator works out the figure, not the filing.