How to invoice for materials as a subcontractor
If you buy materials for a job, the way you put them on your invoice decides how much CIS is taken. Show them clearly, at cost, with receipts behind them, and the deduction falls on the labour only. Here is the layout, the evidence and a worked example.
On this page
Why materials get their own lines
GOV.UK tells contractors to work out a CIS deduction by starting with the total of your invoice, then taking away what you have paid for yourself, before applying the percentage to what is left. If your materials are buried inside a single "labour and materials" figure, the contractor can't tell what you bought, and may deduct from the lot. Separate lines make it easy for them to do the sum correctly. This page covers the invoice layout. For which costs qualify, see what counts as materials under CIS.
What comes off the deduction base
According to GOV.UK, the contractor takes away the amount you paid for:
- VAT
- materials, but only if you paid for them directly
- consumable stores, meaning equipment that is now unusable
- fuel used on the job, except for travelling
- plant hired for the job
- manufacturing or prefabricating materials
Everything else, including your labour and any profit you add, stays in the amount the CIS percentage is applied to.
The invoice layout
List labour first, then each type of cost on its own line, then a CIS summary at the bottom. Show costs at what you paid, and say what they were for.
| Line | Amount |
|---|---|
| Labour: 5 days at £180.00 (w/e 10 Oct) | £900.00 |
| Materials: plasterboard, joint tape, screws (receipt 4417) | £212.50 |
| Plant hire: tower for 2 days (hire invoice H-209) | £64.00 |
| Total before VAT | £1,176.50 |
| Less costs you paid for (£212.50 + £64.00) | £276.50 |
| Labour subject to CIS | £900.00 |
| CIS deduction at 20% | £180.00 |
| Amount payable (£1,176.50 − £180.00) | £996.50 |
If you're not verified and the 30% rate is taken, the deduction is £270.00 and you'd be paid £906.50. Check the figures with the CIS calculator.
Keep the evidence
A contractor can ask for evidence that you paid for materials directly, for example receipts. GOV.UK says that if you can't show any, they will estimate the cost, and their estimate may be lower than what you really spent. So keep receipts, put the receipt or invoice number on the line, and send copies if asked. Receipts also support your own records for tax. See how long to keep invoices.
Should you add a mark-up?
The GOV.UK wording for contractors is about what you have paid. For that reason, show materials at cost where you can, and make any extra charge for handling, ordering or profit a separate line, as part of your labour or service charge. How a mark-up is treated is something to confirm with the contractor and your accountant before it becomes a habit, because the rules look at what you paid directly.
VAT on materials
If you're VAT registered, VAT is added to the whole invoice in the normal way, unless the domestic reverse charge applies. VAT is never part of the CIS deduction. If you're not VAT registered, don't show VAT at all. See VAT on contractor invoices.
What the contractor must record
If a contractor makes deductions, they must keep records of the gross amount of each payment you invoiced, excluding VAT, the deductions they made and the cost of materials you invoiced them for, also excluding VAT. They must keep these for at least three years after the end of the tax year. A clearly laid out invoice makes their records, and your statement, match yours. See the monthly return explained. This guide is general information, not tax advice.
Frequently asked questions
Do I put materials on my invoice if I'm a CIS subcontractor?
Yes. Show them on separate lines at cost, so the contractor can leave them out when working out the CIS deduction.
Will CIS be taken off materials I paid for?
Not if you paid for them directly. GOV.UK says the contractor takes away the amount you paid for materials before applying the percentage.
What if I don't have receipts?
The contractor can estimate the cost of the materials, which may be less than you actually paid. Keep receipts and give copies if asked.
Is plant hire treated like materials?
GOV.UK lists plant hired for the job, consumable stores, fuel (not for travelling) and prefabrication among the costs left out, alongside materials and VAT.
Can I add a mark-up to materials?
Show materials at what you paid. Any extra charge should be shown separately. Check with your contractor and an accountant how it will be treated.
Sources
- What you must do as a CIS contractor: make deductions and pay subcontractors – GOV.UK
- What you must do as a CIS subcontractor – GOV.UK
- Invoices: what they must include – GOV.UK
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.