1. Your details
2. Customer (the contractor)
Most subcontractor work for a main contractor is reverse charge. Charge VAT normally if the customer has told you in writing they are an end user or intermediary, or if they are not VAT or CIS registered (for example a homeowner).
3. Invoice
4. Work and materials
One line per item. Choose Labour for your work, Materials for things you bought for the job, and Plant hire for equipment you hired in. CIS is only taken from labour.
5. Payment details and notes
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Your invoice
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CIS invoices: common questions
Is CIS taken off materials?
No. The contractor works out the deduction on the labour part of the invoice only. VAT, materials you bought for the job, plant hire you paid for, fuel (except for travel) and CITB levy are left out. If labour and materials are not shown separately, the contractor may take CIS off the whole amount, so always split them. Keep receipts: the materials figure should be what you actually paid.
What are the CIS rates?
20% if you are registered for CIS, 30% if you are not registered, and 0% if HMRC has given you gross payment status. If you are paying 30%, registering as a subcontractor with HMRC usually brings it down to 20%.
When does the reverse charge apply?
The domestic reverse charge applies when you are VAT registered, your customer is VAT registered and registered for CIS, the work is standard-rated (20%) or reduced-rated (5%) and reported under CIS, and the customer is not the end user or an intermediary. You show the VAT rate and amount on the invoice but do not charge it. The customer pays it to HMRC instead. The invoice needs wording that makes this clear, such as "Reverse charge: customer to pay the VAT to HMRC".
It does not apply to zero-rated work, to work for homeowners or other customers who are not VAT and CIS registered, or when the customer has told you they are an end user or intermediary. If the reverse-charge part of an invoice is 5% or less of its total value, HMRC lets you charge VAT normally on the whole invoice.
Does the CIS deduction change the VAT?
No. VAT is worked out on the full value before CIS. With normal VAT, the contractor pays you the total plus VAT, less the CIS deduction. With the reverse charge, they pay you the total less the CIS deduction, and deal with the VAT themselves.
Should the CIS deduction be on my invoice?
Many subcontractors show it, as this page does, so the amount the contractor will actually pay is clear. The contractor then gives you a payment and deduction statement each month showing what they deducted. Keep those: you claim the deductions back against your tax bill in your Self Assessment return (or, for a limited company, against your PAYE bill).
What must a VAT invoice show?
A unique invoice number, the invoice date, the time of supply if different, your name, address and VAT number, the customer's name and address, a description of the work, and for each rate the net amount, the VAT rate and the VAT amount. This page fills those in from what you type.
How is the deduction rounded?
HMRC does not set a rounding rule for each deduction, and most contractors round to the nearest penny, as this page does. The contractor's payment and deduction statement shows the figure they actually took.