CIS Invoices Made Simple

The Construction Industry Scheme (CIS) is an HMRC tax scheme for the UK construction industry. Under CIS, contractors deduct money from a subcontractor's payments and pass it directly to HMRC as an advance payment towards the subcontractor's tax and National Insurance contributions. The standard deduction rate is 20% for verified subcontractors and 30% for unverified.

CIS applies to contractors and subcontractors working in the construction industry in the UK. If you are a subcontractor being paid by a contractor, your invoice must clearly show the gross amount, the CIS deduction, and the net amount payable. If you are a contractor, you are responsible for making the correct deduction and reporting it to HMRC each month.

HMRC sets three CIS deduction rates: 20% for subcontractors registered with CIS (verified status), 30% for subcontractors not registered with CIS or whose details cannot be verified, and 0% (gross payment status) for subcontractors who have applied to receive payments without deduction — typically those with a strong compliance record. InvoiceAdept supports all three rates.

A Unique Taxpayer Reference (UTR) number is a 10-digit number issued by HMRC to identify you for tax purposes. Under CIS, subcontractors must provide their UTR number to the contractor before work begins, and it is best practice to include it on your invoice. Contractors need the UTR to verify the subcontractor with HMRC and confirm the correct deduction rate.

CIS deductions apply to the labour portion of a subcontractor's invoice only — not to the cost of materials. This is an important distinction: if your invoice includes both labour and materials, only the labour element should have the CIS deduction applied. InvoiceAdept handles this automatically, keeping labour and materials separate on each invoice.

When a contractor verifies a subcontractor with HMRC, HMRC issues a CIS verification number. This number confirms the subcontractor's status and the applicable deduction rate. Contractors must keep a record of this verification number. InvoiceAdept lets you store and display the CIS verification number on invoices so your records are always HMRC-ready.

Contractors must file a monthly CIS return with HMRC showing every subcontractor paid during the tax month, the amounts paid, and the deductions made. Returns are due by the 19th of the following month. Failure to submit on time can result in HMRC penalties. InvoiceAdept generates a monthly CIS summary for you, making the return straightforward to complete.

Yes. Our free plan lets you send up to 5 CIS invoices per month with automatic deduction calculations and compliant PDF templates. It is ideal for sole trader subcontractors with a small volume of invoices. Upgrade to Pro for unlimited invoices, monthly CIS return summaries, and payment reminders.