VAT comes off first. The CIS deduction is worked out on the amount without VAT, and you pay the subcontractor their VAT in full. Under the domestic reverse charge there is no VAT on the invoice at all, and you account for it yourself.
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.
With VAT added to the invoice:
| 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 | £1,000 |
| Pay the subcontractor | £5,300 |
The same invoice under the reverse charge:
| 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 |
Enter the invoice as the subcontractor sent it. Leave a box empty if it does not apply.
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.
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