CIS Deduction Calculator, 2026/27

How this is calculated

Under the Construction Industry Scheme, a contractor paying a subcontractor for construction work must first verify the subcontractor's status with HMRC, which confirms whether to deduct tax at the standard 20% rate, the higher 30% rate for unverified subcontractors, or nothing at all for those with gross payment status.

Before applying the deduction rate, the contractor strips out the genuine cost of materials the subcontractor incurred, since CIS deductions only apply to the labour and other qualifying elements of the payment, not to materials the subcontractor has already paid for.

The calculator subtracts your materials figure from the gross payment to find the labour element, applies the selected deduction rate to that labour element only, and shows the resulting net payment due to the subcontractor.

Contractor responsibilities

Contractors must register with HMRC for CIS, verify each new subcontractor before the first payment, deduct the correct amount, provide a written statement of the deduction, and pay the deducted amounts over to HMRC monthly, alongside a CIS return.

Getting the materials split wrong, or failing to verify a subcontractor and using the wrong rate, can lead to penalties and having to make good any underpaid deduction, so keeping clear evidence for every materials claim matters.

What happens to the deduction

For a subcontractor who is a sole trader, CIS deductions withheld during the year are treated as payments on account of their income tax and Class 4 National Insurance liability, reconciled through their self-assessment tax return.

Where deductions exceed the actual tax and National Insurance due, the excess becomes a repayment, which is exactly the position the CIS Tax Rebate Calculator is designed to estimate.

What is the standard CIS deduction rate?

20% for subcontractors who are registered with HMRC and successfully verified by the contractor, rising to 30% for subcontractors who cannot be verified or are not registered, and 0% for those with gross payment status.

Are materials always excluded from the deduction?

Only the genuine cost of materials the subcontractor has actually paid for is excluded, and the contractor should have reasonable evidence of that cost; if materials cannot be evidenced, the whole payment may be treated as labour.

Does CIS apply to limited company subcontractors too?

Yes, contractors deduct CIS from company subcontractors in the same way, but the company then offsets the deductions suffered against its PAYE and National Insurance liabilities rather than through personal self-assessment.

What if I have gross payment status?

Subcontractors with gross payment status are paid in full with no CIS deduction, but they still need to pay their tax and National Insurance through self-assessment in the normal way, usually in two instalments during the year.