CIS and the VAT reverse charge on the same invoice

How do CIS and the VAT reverse charge work on the same invoice?

The subcontractor's invoice carries no VAT. You work out the CIS deduction as normal on the amount less their own costs, pay them the invoice less the deduction, and account for the VAT on your own VAT return.

Free, with no sign-up. Everything is worked out in your browser: nothing you type is sent to us or stored. A guide, not tax advice. Based on GOV.UK guidance checked on 31 October 2026. Use the rate HMRC gave you when you verified the subcontractor.

Both rules apply to the same payment and do not interfere with each other. CIS decides how much you keep back for HMRC. The reverse charge decides who accounts for the VAT.

CIS and reverse charge worked example
Invoice, excluding VAT	£5,000
Less what the subcontractor paid for	£1,500
The rate applies to	£3,500
CIS deduction at 20%	£700
VAT on the invoice	£0
Pay the subcontractor	£4,300
VAT you account for under the reverse charge	£1,000

Whether the reverse charge applies at all depends on who your customer is and what the work is. Check that first.

CIS deduction on a subcontractor's invoice

Enter the invoice as the subcontractor sent it. Leave a box empty if it does not apply.

Invoice amount, excluding VAT (£)CIS rate HMRC gave you

Materials they bought (£)Plant they hired (£)Fuel, consumables, prefabricated (£)

VAT on this invoice

The rate applies to

Keep back and pay HMRC

Pay the subcontractor

VAT on the invoice

Invoice total

Fuel only counts when it is not for travel. Ask for receipts for materials; if there are none, HMRC says to estimate their cost. Give the subcontractor a payment and deduction statement within 14 days of the end of each tax month.

Where SUBR comes in

SUBR is AI software for UK contractors who send work out to subcontractors. Its AI reads your client quote, your office names each trade's share, and SUBR builds every scope with your costs, margin and client price left off it. Each subcontractor answers on their own link and sees only their own price.

How do CIS and the VAT reverse charge work on the same invoice?

CIS deduction on a subcontractor's invoice

More questions

Where SUBR comes in

See it on a quote