CIS Invoice Template UK: How to Invoice With a CIS Deduction (2026)

If you work in construction as a subcontractor, your invoices are different from everyone else's. Under the Construction Industry Scheme (CIS), the contractor who pays you doesn't hand over the full amount — they withhold a slice (usually 20%) and send it straight to HMRC as an advance payment towards your tax and National Insurance.

Get the invoice right and you'll be paid the correct amount, your CIS deductions will reconcile cleanly at tax time, and you'll look like a professional who knows the scheme. Get it wrong and you risk being deducted at the higher 30% rate, disputes over materials, or VAT errors.

This guide walks through exactly what goes on a CIS invoice, how the deduction is calculated, and gives you a free template you can fill in right now.

What Is CIS and Who Does It Apply To?

The Construction Industry Scheme is HMRC's way of collecting tax from construction subcontractors as they're paid, rather than waiting until the end of the tax year.

• Contractors deduct money from a subcontractor's payment and pass it to HMRC.
• Subcontractors receive the payment minus the deduction. That deduction counts towards your eventual tax bill.

CIS covers most construction work in the UK — site preparation, building, alterations, repairs, decorating, demolition and more. If you're a sole trader, partnership or limited company doing construction work for a contractor, CIS almost certainly applies to you.

The Three CIS Deduction Rates

How much the contractor withholds depends on your CIS status:

Status	Deduction rate	When it applies
Gross payment status	0%	You're approved by HMRC to be paid in full and handle your own tax
Registered subcontractor	20%	You're registered for CIS and verified by the contractor
Unregistered / unverified	30%	You haven't registered for CIS, or the contractor can't verify you

The lesson is simple: register for CIS. The difference between 20% and 30% is a big chunk of your cash flow tied up with HMRC until you reconcile.

What the Deduction Is Calculated On (Materials Matter)

This is the single most misunderstood part of CIS invoicing: the deduction only applies to the labour element, not to materials.

When you invoice, you should separate:

• Labour — your work. The CIS deduction is taken from this.
• Materials — the cost of materials, plant hire you paid for, consumables, fuel for plant. These are excluded from the deduction.

If you lump everything together as one figure, the contractor may apply the deduction to the whole amount — costing you money. Always itemise labour and materials separately on a CIS invoice.

What to Put on a CIS Invoice

A compliant, professional CIS invoice should include:

1. The word "Invoice" and a unique invoice number
2. Invoice date (and the payment due date / terms)
3. Your business name, address and contact details
4. Your UTR (Unique Taxpayer Reference) — contractors need it to verify you
5. Your CIS registration status (so the right rate is applied)
6. The contractor's name and address
7. A clear description of the work / site
8. Labour charges (the amount the CIS deduction applies to)
9. Materials charges (separately listed, excluded from the deduction)
10. The CIS deduction shown explicitly (e.g. "Less CIS @ 20% on labour")
11. The net amount payable after the deduction
12. VAT treatment — including the reverse charge statement where it applies (see below)
13. Your payment details (bank name, sort code, account number)

Showing the deduction on the invoice isn't strictly required — the contractor calculates and reports it — but it's good practice. It makes the payment you'll actually receive crystal clear and avoids "why is this short?" emails.

Worked Example: A CIS Invoice With a 20% Deduction

Say you're a registered subcontractor who did £2,000 of labour and supplied £500 of materials:

Line	Amount
Labour	£2,000.00
Materials	£500.00
Subtotal	£2,500.00
Less CIS deduction @ 20% (on £2,000 labour only)	−£400.00
Net amount payable to you	£2,100.00

The contractor pays you £2,100, sends the £400 to HMRC under your UTR, and gives you a CIS payment and deduction statement (your monthly "CIS slip"). Keep every one — that £400 is money you've already paid towards your tax, and you'll claim it back or offset it when you file.

CIS and VAT: The Domestic Reverse Charge

Since March 2021, most VAT-registered construction work between VAT-registered businesses falls under the VAT domestic reverse charge. In plain terms:

• You do not add VAT to the invoice.
• The customer (contractor) accounts for the VAT themselves.
• Your invoice must state that the reverse charge applies and show the VAT rate that would have applied.

A typical note reads: "Reverse charge: Customer to account for VAT to HMRC at 20%." If you're not VAT-registered, or the reverse charge doesn't apply to your job, invoice VAT as normal. When in doubt, check HMRC's reverse charge guidance or ask your accountant.

Free CIS Invoice Template

You don't need a spreadsheet or paid software. With 1nvoic3 you can build a clean CIS invoice in a minute:

1. Add your business details, UTR and CIS status.
2. List labour and materials as separate line items.
3. Add a line for the CIS deduction so the net payable is obvious.
4. Add the reverse charge note if you're VAT-registered and it applies.
5. Download a professional PDF and send it.

It's free, works on your phone on site, and needs no sign-up to get started.

CIS Invoicing FAQs

Do I charge the contractor the full amount or the amount after deduction? Invoice the full amount (labour + materials). The contractor calculates and withholds the CIS deduction and pays you the rest. Showing the deduction on the invoice just makes the net payment clear.

Is the CIS deduction taken from materials? No. It's only taken from the labour portion — which is exactly why you should itemise labour and materials separately.

What if I'm not registered for CIS? You'll be deducted at 30% instead of 20%. Registering with HMRC is quick and saves you tying up extra cash.

Where does the deducted money go? To HMRC, under your UTR, as an advance payment towards your tax and National Insurance. You reconcile it when you file your Self Assessment (sole traders) or via your company's payroll (limited companies).

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Working on site and need to invoice now? Create a professional CIS invoice — labour, materials and deduction lines included — with 1nvoic3. Free, instant, no sign-up. See also our contractor invoice guide and how to invoice as a sole trader in the UK.