VAT and CIS on invoices

CIS is deducted from labour only, at 20% or 30%, and the deduction is shown on the invoice. VAT is added on top when you are registered.

1. What CIS is, in one line

Under the Construction Industry Scheme the company that pays you holds back 20% of your labour (30% if you are not registered) and pays it to HMRC on your behalf. Materials are never deducted. It is not lost: it counts towards your tax at Self Assessment. Our CIS guide has the detail.

2. Switch it on

On the invoice, under the lines, flip Apply CIS deduction. The rate defaults to 20%; change it to 30% if that is your situation. A deduction line appears under the subtotal and Amount due drops to what you will actually receive. Lines marked Materials are left out of the deduction.

3. Make it the rule for a client

Choose Always for this client and every new invoice to that company starts with CIS on. Companies that publish their invoicing terms on Cowstail set this for you.

4. VAT

If you are VAT registered, set your VAT number and rate in Settings › Tax. Invoices then show VAT at 20% on top of the subtotal, and CIS is worked out on the labour before VAT, which is the order HMRC expects.

5. See it add up

Money shows the CIS deducted this tax year as one figure, ready for the return.

Related: CIS calculator, finances and Self Assessment, business and tax settings.