What is self-billing for CIS subcontractors?

As of October 2026, self-billing means your contractor writes your invoice for you. If you are VAT registered, VAT Notice 700/62 needs a written agreement first, and every self-bill must be marked "SELF-BILLING".

Many main contractors in the Construction Industry Scheme (CIS) pay subcontractors from their own records of the work done, not from the subcontractor's invoice. The contractor raises the invoice, sends you a copy and pays you. That is self-billing. It saves chasing invoices, but it means you have to check someone else's figures.

Self-billing if you are VAT registered

For VAT, a self-bill only counts as your VAT invoice if the rules in regulation 13 of the VAT Regulations 1995 are met. HMRC sets them out in VAT Notice 700/62. The agreement must be in writing, on paper or electronic, and it must:

• record that you agree to the contractor raising your invoices
• say you will not raise your own VAT invoices for the work it covers
• say you will accept each self-bill the contractor creates
• have a start date and an expiry date
• say you will tell the contractor if you stop being VAT registered or change your VAT number

Section 3.3 of the Notice says it is advisable to review the agreement every 12 months. To keep self-billing after the agreed period ends, it must be reviewed and a new period agreed. If it is part of a business contract, it lasts until that contract ends.

By law each self-bill must be marked "SELF-BILLING". HMRC also advises, but does not require, the line "The VAT shown is your output tax due to HMRC". That VAT goes on your VAT return as VAT you owe, not as VAT you can reclaim.

With the reverse charge. Most VAT-registered subcontractors working for a VAT-registered contractor are under the VAT domestic reverse charge, so no VAT is paid to you. Notice 700/62 does not deal with this. HMRC's reverse charge guide says the invoice must carry the words "reverse charge" and show the VAT amount or rate without adding it to the total. In our reading, a reverse charge self-bill should say "SELF-BILLING" and carry reverse charge wording such as "Customer to pay the VAT to HMRC", and the "your output tax" line should not appear, because the contractor accounts for that VAT, not you. The guide also says that if a self-billed supply needs correcting, the contractor raises the credit note. Our reverse charge guide covers when it applies.

If you are not VAT registered

Self-billing still works, but without VAT. Notice 700/62 says a contractor must not issue self-billed VAT invoices for a supplier who is not registered. HMRC's self-billing guidance says a contractor can carry on self-billing a supplier who deregisters, but cannot issue VAT invoices, and must not add VAT for suppliers who are not VAT registered. The self-bill is still your sales invoice. In our reading, record it as your income and do not raise a second invoice for the same work.

Self-bill and CIS statement side by side

A tax month runs from the 6th of one month to the 5th of the next, so the statement for 6 June to 5 July 2026 was due by 19 July 2026. With gross payment status, CIS 340 says no statement is required.

A worked example

You are a VAT-registered plasterer working for a VAT-registered main contractor, so the reverse charge applies. In the tax month to 5 July 2026 the contractor self-bills you for this:

The deduction comes off the labour only. GOV.UK says it is 20% if you are registered and verified for CIS, 30% if not, and nothing with gross payment status. CIS 340 says it does not apply to the cost of materials or to VAT. Your July statement should show gross £2,500, materials £500 and CIS deducted £400.

What this means for you

Self-billing moves the paperwork, not the responsibility. The figures on the self-bill become your income figures, and a wrong materials line or a missed day costs you money. Check every self-bill when it arrives, not at the end of the year.

For your tax records, GOV.UK says sole traders record total pay before deductions as income and the deductions as CIS. In our reading, that means recording £2,500 as income and £400 as CIS deducted, not £2,100. Making Tax Digital (MTD) for Income Tax uses the same income categories as Self Assessment, and its guidance says that if you only know your income after expenses were taken off, you record the full amount. That guidance does not mention CIS, so applying it to CIS is our reading.

Steps to check a self-bill

1. If you are VAT registered, get a signed copy of the agreement, note its expiry date and keep it.
2. Check the self-bill is marked "SELF-BILLING" and shows your name, VAT number if you have one, and the right VAT or reverse charge wording.
3. Check the days or hours and the rate against your own diary.
4. Check materials you bought appear at what you paid, so CIS is not taken from them. If you are VAT registered, that is the cost excluding VAT. CIS 340 only includes the VAT if you are not registered.
5. Check the deduction is 20% of the labour if you are registered and verified, or nothing with gross payment status.
6. Match the self-bills for each tax month, 6th to 5th, to the statement the contractor must give you by the 19th if it deducted CIS. Otherwise, match them to your bank.
7. Record the gross figure as income and the CIS deducted separately.

The free MTD check shows when Making Tax Digital starts for you, and the trades section has more on CIS.