CIS Invoicing · 2026/27
A CIS invoice is a normal invoice with one job to do: make it obvious which part is labour. Get that wrong, and the contractor can take 20% from your materials too, money you only see again after the tax year ends.
By QuoteDone Editorial Team · Last updated: 25 September 2026 · Checked against GOV.UK guidance
Under the Construction Industry Scheme, your contractor deducts tax from the labour part of what they pay you: 20% if you are registered, 30% if you are not matched. The direct cost of the materials you supply is left out of the calculation.
But the contractor can only leave it out if they can see it. An invoice with one total gives them nothing to work with, and many will simply deduct from the lot.
What Must Be on Every CIS Invoice
There is no special "CIS invoice" form. It is a normal business invoice, and GOV.UK sets out what every invoice must include. CIS then adds a few details that protect your deduction.
| Detail | Required by | Why it matters |
|---|---|---|
| Unique invoice number | GOV.UK invoice rules | Never reuse a number |
| Your name, and any business name you use | GOV.UK (sole traders) | Must match the name you registered for CIS |
| Your address and contact details | GOV.UK | If you trade under a business name, an address where legal documents can reach you |
| Customer's name and address | GOV.UK | The contractor you are billing |
| Clear description of the work | GOV.UK | Site, job and period covered |
| Supply date and invoice date | GOV.UK | When the work was done, and when you billed it |
| Amounts charged and total owed | GOV.UK | Each line, then the total |
| Labour as a separate line | CIS in practice | This is the figure CIS is taken from |
| Materials at cost as a separate line | CIS in practice | Lets the contractor leave them out of the deduction |
| Your UTR | CIS in practice | Helps the contractor match you to HMRC's records |
| VAT details, if VAT registered | VAT rules | Including reverse charge wording where it applies |
Source: GOV.UK – Invoices: what they must include.
Every field, split correctly, in one minute
Our free generator puts labour and materials on separate lines and shows the CIS deduction for you.
TRY FREE INVOICE GENERATOR →✓ No registration required · 100% Free · HMRC 2026/27 Aligned
The £160 Line: Lump Sum vs Itemised
£2,000 invoice: £1,200 labour, £800 materials at cost, 20% CIS
The £7,680 is not lost for good: it counts towards your tax and comes back through your return. But it is held by HMRC until after the tax year ends, while your supplier bills are due now.
A week of first fix: an electrician supplying cable and containment
What Counts as Materials, and the Markup Trap
The deduction is not taken from the direct cost to you of:
- materials used in the job (bricks, timber, cable, pipework, fixings);
- consumable stores used up on the job;
- fuel for plant (not fuel for travelling);
- plant you hire in for the job;
- the cost of manufacturing or prefabricating materials.
"Direct cost" means what you actually paid, and can prove you paid. If you charge the contractor more than that, the extra is treated as part of your payment and CIS applies to it.
Materials with a markup: £1,200 labour, materials cost £800, charged at £900
Showing materials "at cost" on the invoice, with any markup included in the labour or a separate line, keeps the calculation clean and defensible.
VAT and the Domestic Reverse Charge
CIS is always worked out on the payment excluding VAT. If you are VAT registered and the domestic reverse charge applies (broadly, when you supply CIS construction services to another VAT-registered business that is not the end user), your invoice shows the VAT but states that the reverse charge applies. The contractor then accounts for that VAT to HMRC instead of paying it to you.
Before You Send: The 60-Second Check
- Labour and materials on separate lines. Never a single total.
- Materials shown at what they cost you, with receipts saved for each.
- Your name exactly as registered for CIS, plus your UTR.
- Unique invoice number, both dates, clear description of site and work.
- VAT correct for the job, including reverse charge wording if it applies.
- Check the statement that comes back. When your monthly payment and deduction statement arrives, confirm the deduction was taken from labour only.
Frequently Asked Questions
What must be on a CIS invoice?
The standard invoice details: a unique invoice number, your name and any business name, your address and contact details, the customer's name and address, a clear description of the work, the supply date and invoice date, the amounts and the total. For CIS, also show labour and materials as separate lines and include your UTR so the contractor can match you to HMRC's records.
Is CIS deducted from materials?
No. The deduction is taken from the labour part of the payment. The direct cost to you of materials, consumables, fuel for plant and hired plant is left out, provided it is shown and can be evidenced.
What if I add a markup to materials?
Only the direct cost of the materials is excluded. Any markup you add is treated as part of the payment the deduction applies to. For example, materials that cost you £800 and are charged at £900 leave £100 subject to CIS.
Is CIS calculated before or after VAT?
Before. CIS is worked out on the payment excluding VAT. If the domestic reverse charge applies, your invoice shows the VAT but the contractor accounts for it to HMRC instead of paying it to you.
What happens if I send a lump-sum invoice?
The contractor may deduct CIS from the whole amount. On a £2,000 invoice with £800 of materials, that is £400 deducted instead of £240, so you receive £160 less. You can recover the overpayment through your tax return, but not until after the tax year ends.
Do I need to keep receipts for materials?
Yes. Keep supplier invoices or receipts for every materials line. The contractor may ask for them, and HMRC can challenge a split that is not supported.
Should my invoice show the CIS deduction?
It is not required, but many subcontractors show the labour figure, the materials figure and the expected deduction so the amount payable is clear. The contractor confirms the actual deduction on your monthly payment and deduction statement.
Important: This article is general information about invoicing under the Construction Industry Scheme, not personal tax advice. How a payment is split and which VAT rules apply depend on the job and the parties involved. Always verify against GOV.UK or speak to a qualified accountant.
Author: QuoteDone Editorial Team · Last updated: 25 September 2026
Sources: GOV.UK – Invoices: what they must include · GOV.UK – What you must do as a CIS contractor · GOV.UK – VAT domestic reverse charge
Need professional invoices fast?
Create clean, compliant invoices in seconds with our free tool.
TRY FREE INVOICE GENERATOR →Ready to claim your CIS refund?
Use our free calculator to find out what HMRC owes you.
CHECK YOUR REFUND NOW →