CIS Tax Calculator UK – Free Construction Industry Scheme Calculator 2025
What is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a UK tax system that requires contractors to deduct money from subcontractor payments and pass it directly to HM Revenue and Customs (HMRC). This scheme applies to most construction work payments and affects thousands of businesses across the UK construction industry.
Under CIS, when a contractor pays a subcontractor for construction work, they must:
- Verify the subcontractor’s details with HMRC
- Deduct the appropriate CIS rate from labour costs
- Pay the deducted amount to HMRC by the 19th of each month
- Provide the subcontractor with a monthly statement
CIS Tax Rates 2024: 20% vs 30%
20% CIS Rate – Registered Subcontractors
Who qualifies: Subcontractors who have successfully registered with HMRC under the Construction Industry Scheme and passed verification checks.
Benefits: Lower deduction rate means better cash flow and reduced tax burden.
30% CIS Rate – Unregistered Subcontractors
Who gets this rate: Subcontractors who haven’t registered with HMRC, failed verification, or are new to the scheme.
Impact: Higher deductions significantly affect cash flow – an extra 10% deducted from every payment.
How CIS Calculations Work: Step-by-Step
Understanding CIS calculations is crucial for both contractors and subcontractors. Here’s exactly how it works:
CIS Calculation Example
Scenario: Contractor pays registered subcontractor £5,000 for work including £1,200 materials
- Gross Payment: £5,000
- Materials (CIS exempt): £1,200
- Labour subject to CIS: £5,000 – £1,200 = £3,800
- CIS deduction (20%): £3,800 × 20% = £760
- Net payment to subcontractor: £5,000 – £760 = £4,240
- Payment to HMRC: £760
Result: Subcontractor receives £4,240, contractor pays £760 to HMRC
Use our calculator above to work out your own CIS deductions instantly!
Materials and CIS: What’s Exempt?
One of the most important CIS rules is that materials are completely exempt from CIS deductions. However, strict conditions apply:
What Qualifies as CIS-Exempt Materials
- Building materials (bricks, cement, timber, steel, etc.)
- Fixtures and fittings that become part of the building
- Plant and equipment incorporated into the construction
- Items physically built into the structure
What Doesn’t Qualify
- Tools and equipment removed after use
- Temporary structures like scaffolding
- Consumables (fuel, cleaning materials, PPE)
- Hire charges for equipment
CIS Registration: How to Reduce Your Rate from 30% to 20%
If you’re currently paying 30% CIS deductions, registering with HMRC can cut this to 20%. Here’s what you need to know:
Eligibility Requirements
To qualify for 20% CIS rate, subcontractors must pass HMRC tests covering:
- Business test: Prove you run a genuine construction business
- Turnover test: Meet minimum annual turnover requirements
- Compliance test: Show good tax compliance history
- Identity verification: Confirm your business identity
Registration Process
- Apply online through HMRC’s digital services
- Provide business documentation and bank statements
- Wait for HMRC verification (typically 2-4 weeks)
- Receive your CIS registration number
- Notify all your contractors of your new status
Ready to Calculate Your CIS Deductions?
Use our calculator above to see exactly how much CIS tax will be deducted from your payments. Try different scenarios with our tool to plan your cash flow better.
Monthly CIS Compliance: What Contractors Must Do
Contractors have strict monthly obligations under CIS that must be completed by specific deadlines:
Monthly CIS Return (CIS300)
Due: 19th of each month following the tax month
Must include:
- Details of all subcontractors paid during the month
- Total payments made and CIS deductions taken
- Materials costs claimed by subcontractors
- Verification status of each subcontractor
Monthly Payment to HMRC
Payment due: 19th of the month (22nd if paying electronically)
Amount: Total CIS deductions made during the previous month
Common CIS Mistakes That Cost Money
Contractor Mistakes
- Not verifying subcontractors: Leading to incorrect CIS rates
- Applying CIS to materials: Over-deducting and causing disputes
- Missing monthly deadlines: Incurring unnecessary penalties
- Poor record keeping: Making compliance difficult
Subcontractor Mistakes
- Not registering for CIS: Paying 30% instead of 20%
- Inadequate materials documentation: Losing exemption benefits
- Not claiming CIS refunds: Missing out on overpaid tax
- Poor invoice management: Making CIS claims harder
CIS and Your Tax Return
CIS deductions aren’t lost money – they’re advance payments toward your annual tax bill:
- All CIS deductions count as tax already paid
- Include CIS certificates with your Self Assessment
- You may get a refund if CIS exceeds your actual tax liability
- CIS helps spread your tax payments throughout the year
Using Technology for CIS Management
Modern CIS compliance is increasingly digital:
Current Digital Requirements
- Online CIS returns are mandatory for most businesses
- Electronic verification of subcontractors
- Digital record-keeping becoming standard
Benefits of CIS Software
- Automatic CIS calculations (like our calculator above)
- Deadline reminders for returns and payments
- Integration with accounting systems
- Automated subcontractor verification
Getting Professional CIS Help
Many construction businesses benefit from professional CIS support, especially when:
- Starting a new construction business
- Struggling with monthly compliance
- Facing HMRC investigations
- Managing complex subcontractor arrangements
- Planning business growth or changes
Calculate Your CIS Tax Now
Don’t let CIS calculations confuse you. Use our free calculator above to work out exactly what you’ll pay or receive. It’s instant, accurate, and covers all the scenarios you need.
Conclusion: Mastering CIS Tax
The Construction Industry Scheme doesn’t have to be complicated. With the right knowledge and tools (like our calculator), you can:
- Calculate CIS deductions accurately using our free tool
- Understand the difference between 20% and 30% rates
- Maximize materials exemptions to reduce deductions
- Stay compliant with monthly requirements
- Use CIS strategically for tax planning
Remember, if you’re a subcontractor paying 30%, registering for CIS could save you thousands of pounds every year. Use our calculator to see how much you could save!