A CIS invoice must show the full value of the work and the smaller amount the contractor actually pays after the deduction. The deduction is normally worked out on labour, not materials or VAT.
This guide gives you a copyable CIS invoice template, then runs the same job at 0%, 20% and 30% so each figure can be checked.
This is general information, not tax advice. The contractor verifies the subcontractor and uses the deduction treatment HMRC provides. Sendinvo does not choose your rate or file CIS returns.
Copyable CIS invoice template
Subcontractor
[Full legal business name]
[Trading name, if different]
[Address and contact details]
[Company number, if limited]
[VAT number, if VAT registered]
[UTR or CIS reference if your contractor requires it in their process]
Contractor and job
Bill to: [Contractor’s full name and address]
Site: [Site address]
Project or package: [Job reference]
Purchase order: [PO number]
Application or valuation: [Reference and period]
Invoice details
Invoice number: [Unique number]
Invoice date: [Date]
Supply date or period: [Date or valuation period]
Payment due: [Date and agreed term]
| Description | Amount |
|---|---|
| Labour: [work completed] | £[ ] |
| Materials supplied: [summary] | £[ ] |
| Plant or hire: [summary] | £[ ] |
| Subtotal excluding VAT | £[ ] |
| VAT [normal VAT or reverse charge treatment] | £[ ] |
| Gross invoice total | £[ ] |
| CIS deduction: [rate]% of £[deduction base] | -£[ ] |
| Amount due | £[ ] |
Bank details: [ ]
Payment reference: [Invoice number]
Supporting files: [valuation, signed sheet, delivery notes or certificates]
Worked CIS invoice at 20%
A registered subcontractor invoices a main contractor for £3,000 labour and £1,200 materials. Ignore VAT for the first calculation.
| Calculation | Amount |
|---|---|
| Labour | £3,000 |
| Materials | £1,200 |
| Gross invoice total | £4,200 |
| Amount subject to CIS | £3,000 |
| CIS at 20% | -£600 |
| Contractor pays | £3,600 |
The £600 deduction is 20% of the £3,000 labour. It is not 20% of the £4,200 total.
HMRC’s CIS guide explains that the contractor calculates the deduction after excluding VAT and qualifying materials supplied by the subcontractor.
The same invoice at 0%, 20% and 30%
| CIS treatment | Deduction on £3,000 labour | Amount due on £4,200 |
|---|---|---|
| Gross-payment status, 0% | £0 | £4,200 |
| Registered subcontractor, 20% | £600 | £3,600 |
| Unregistered subcontractor, 30% | £900 | £3,300 |
The materials remain £1,200 in all three examples. The rate changes the deduction, not the value of the materials.
The contractor must verify the subcontractor and apply the result HMRC returns. Do not put yourself on 20% because that is the rate you expected.
What counts as materials for the deduction?
The contractor needs evidence of the direct cost of materials the subcontractor supplied for the work. Separate the figures on the invoice and keep the purchase records.
Do not use “materials” as a balancing number that includes profit or labour. HMRC’s CIS guide contains detailed rules and worked examples for materials, plant hire and manufacture. Where treatment is unclear, check the source record with the contractor or accountant before the payment run.
For a simple labour-and-materials package, the invoice should let the contractor see:
- the labour value
- the materials value
- the gross amount before deduction
- the amount on which the deduction is calculated
- the rate and deduction
- the net amount they need to send
CIS and VAT are separate calculations
First decide the VAT treatment. Then calculate CIS on the correct amount excluding VAT.
Under normal VAT rules, a VAT-registered subcontractor might show:
| Calculation | Amount |
|---|---|
| Labour and materials excluding VAT | £4,200 |
| VAT at 20% | £840 |
| Invoice total | £5,040 |
| CIS deduction on £3,000 labour | -£600 |
| Amount paid | £4,440 |
The £840 VAT is not included in the CIS deduction base.
When the VAT domestic reverse charge applies, the subcontractor does not collect the reverse-charge VAT. The invoice needs to make clear that the customer accounts for it. HMRC sets out the covered services and invoice wording in its reverse-charge guidance.
For the same £4,200 supply under the reverse charge and CIS at 20%:
- gross supply: £4,200
- VAT collected by the subcontractor: £0
- VAT for the contractor to account for at 20%: £840
- CIS deduction: £600
- cash due to the subcontractor: £3,600
The VAT figure uses the taxable supply. The CIS deduction uses the labour figure. They happen to use the same percentage here, but they are not the same calculation.
The contractor’s deduction statement is separate
The invoice records what you charged. The contractor’s payment and deduction statement records what they paid and deducted for the tax month.
Keep both. If the net bank payment is £3,600 against a £4,200 invoice, the deduction statement is evidence for the £600 difference. Sendinvo records that difference as a non-cash CIS settlement, so the invoice can show as fully settled when the net payment arrives.
Five CIS invoice mistakes to avoid
1. Taking CIS off the total including materials
Split the labour and materials. Show the deduction base explicitly.
2. Taking CIS off VAT
The deduction calculation excludes VAT. Do not calculate the rate on the VAT-inclusive total.
3. Hiding the net amount due
Do not leave the contractor to subtract the deduction. Print the gross total, deduction and net due together.
4. Applying the reverse charge automatically
CIS and the VAT domestic reverse charge overlap, but they are not identical tests. Check the service, both businesses’ VAT status and whether the customer is an end user.
5. Treating the invoice as the CIS return
The invoice is not a CIS300, contractor verification or payment and deduction statement. Those remain separate responsibilities.
How Sendinvo handles the calculation
Set the CIS rate once: 0%, 20% or 30%. On a sterling invoice, tick the CIS deduction and enter the labour figure. Sendinvo prints the gross total, deduction and net amount due.
If the company is VAT registered and the reverse charge applies, add it in the same CIS section. The invoice shows the VAT treatment and the amount the contractor accounts for without adding that VAT to the cash due.
See the CIS invoice screen or the broader subcontractor invoicing workflow for the product steps.
Start a free Sendinvo account to build the CIS invoice and check the gross, deduction and net before sending it.