CIS Deduction Calculator UK 2025 — How to Work Out What You're Owed

If you're a subcontractor under CIS, working out exactly what should be deducted from your invoice — and what you'll get back at tax time — trips people up more than it should. Here's how the maths actually works.

The Three CIS Rates

30% — if you're not registered with HMRC under CIS
20% — if you're registered as a CIS subcontractor (most people)
0% — if you have Gross Payment Status

How to Calculate the Deduction

CIS is only ever calculated on the labour portion of your invoice — never materials.

Example: Labour: £1,500 Materials: £500 Total invoice: £2,000

If you're on 20% CIS: £1,500 × 20% = £300 deducted. The contractor pays you £1,700 (£2,000 − £300) and sends £300 to HMRC on your behalf.

Why Your Invoice Layout Matters

If labour and materials aren't clearly split on your invoice, a contractor may end up deducting from the full amount — which means you lose more than you should. Always show:

Labour subtotal Materials subtotal CIS deduction (labour × rate) Amount due after deduction

Working Out What You'll Get Back

The 20% or 30% withheld isn't your final tax bill — it's an advance payment. At Self Assessment, HMRC calculates what you actually owe based on your profit (income minus allowable expenses), then credits every CIS deduction against that bill.

For most subcontractors, more gets deducted through CIS than they actually owe — which is why CIS refunds are so common. The gap is usually explained by your expenses: tools, van costs, insurance and materials you've paid for all reduce your taxable profit, but CIS deductions are taken before any of that is accounted for.

A Quick Worked Example

If you invoiced £40,000 in labour over the year at 20% CIS, that's £8,000 already sent to HMRC. Once your personal allowance and legitimate expenses are applied, your actual tax and NI bill might only be £4,500 — meaning you're due roughly £3,500 back.

Keeping the Calculation Accurate

To make sure your deductions (and eventual refund) are correct:

Always separate labour and materials on every invoice Keep every CIS payment and deduction statement from contractors Register for CIS if you haven't — dropping from 30% to 20% is worth doing immediately Track deductions as you go rather than reconstructing them in January

Dayrates calculates the CIS deduction automatically on every invoice, splitting labour and materials correctly and keeping a running total you can hand straight to your accountant.