Does CIS apply to materials?

No. As of October 2026, contractors work out the Construction Industry Scheme (CIS) deduction after removing VAT and the cost of materials you bought yourself, so the 20% or 30% falls only on the labour part.

CIS is a tax on your labour, not on what you spend to do the job. GOV.UK lists the parts of your invoice the contractor must not take deductions from. Everything else, including travel and subsistence paid to you, is in.

What is in and what is out

This follows GOV.UK's contractor and subcontractor guidance and CIS 340, checked on 16 October 2026.

The finer points

Only materials you bought count. CIS 340 says the materials deduction is only for the subcontractor who directly buys the materials for that contract. If the contractor supplied them, there is nothing to take off.

VAT on materials. If you are not VAT registered, the VAT you paid on materials is part of their cost and comes off too. If you are VAT registered, materials are taken off without VAT.

Plant. Scaffolding, mixers, pumps and other plant you hire from a third party are treated as materials, with the fuel to run them. Plant you own is not: no notional hire charge comes off, although fuel it uses on the job can still be treated as materials.

Evidence. The contractor may ask for receipts. Without them, the contractor estimates the cost of materials, and must keep records because it is responsible if the materials figure is overstated.

CITB levy. HMRC's manual says a contractor who recoups the Construction Industry Training Board (CITB) levy from you deducts it from your gross payment. The levy is left out of the gross amount shown on the contractor's monthly return.

A worked example

You are a registered plumber, not VAT registered. You invoice a main contractor £3,000: £1,800 labour, £960 of pipe and fittings you bought (£800 plus £160 VAT), and £240 to hire a pipe-threading machine.

If the contractor ignored the materials and plant, the deduction would be £600, so £240 too much would be taken. That is not lost, but you wait until after 5 April to claim it back through your tax return.

What this means for you

Showing materials clearly protects your cash flow. When the materials line is missing, low or estimated, more of your money sits with HMRC until you file. On your payment and deduction statement, the contractor must show the gross payment, the cost of materials that reduced the deduction, and the amount deducted. Check all three each month.

On your tax return, your income is the full amount before deductions, and the materials you bought go in as a business cost. CIS treatment and your tax bill are separate: materials reduce the deduction during the year and reduce your profit at the year end.

Steps to make sure CIS is only taken from labour

1. Show labour, materials and plant hire as separate lines on every invoice.
2. Keep the receipts for materials and hire, as the contractor may ask for them.
3. If you are not VAT registered, include the VAT you paid in the materials figure. If you are, show materials without VAT.
4. Check each monthly statement: gross payment, materials and deduction should match your invoices.
5. If the materials figure is wrong, raise it with the contractor first. HMRC's manual says either side can contact HMRC if you cannot agree.
6. Claim any over-deduction back on your tax return after 5 April, using your statements.

Use the free MTD check to see when Making Tax Digital starts for you, and see the trades section for more on CIS.