Builder's invoice example — with CIS and VAT
A worked example of a builder's invoice for completed groundworks, showing how CIS is deducted from the labour element while VAT is charged on the full net — the two that trip subcontractors up most.
The job invoiced
A groundworks subcontractor invoices a main contractor for completed foundations. The work is inside the Construction Industry Scheme (CIS), so the contractor deducts 20% from the labour element and pays it to HMRC on the subcontractor's behalf — while VAT is still charged on the full net value.
Getting the order of operations right matters: CIS comes off labour only; VAT goes on the whole net figure. Show both clearly and the payment reconciles first time.
The worked invoice
| Line | Detail | Amount |
|---|---|---|
| Invoice no. | INV-2041 · Issued 12 May · Due 26 May (14 days) | — |
| Labour — groundworks & foundations | As agreed | £4,200.00 |
| Materials — concrete, rebar, blocks, MOT | Supplied | £2,650.00 |
| Plant hire — mini-digger & dumper | 3 days | £680.00 |
| Net subtotal | £7,530.00 | |
| Less CIS deduction @ 20% (labour only) | 20% of £4,200 | −£840.00 |
| VAT @ 20% (on £7,530 net) | £1,506.00 | |
| Total payable to subcontractor | £7,530 + £1,506 − £840 | £8,196.00 |
| CIS paid to HMRC by contractor | On the subcontractor's behalf | £840.00 |
How CIS and VAT work on this invoice
CIS comes off labour only
The 20% deduction (£840) applies to the £4,200 labour element — never to materials or plant. Deducting it from the whole invoice is the classic error.
VAT is charged on the full net
VAT (£1,506) is calculated on the £7,530 net before CIS. CIS and VAT are separate mechanisms and don't net against each other.
The subcontractor still gets credited the CIS
The £840 isn't lost — the contractor pays it to HMRC against the subcontractor's tax record. It's offset when the subcontractor files their return.
Reverse-charge VAT may apply
Between VAT-registered CIS businesses, the domestic reverse charge often applies — the customer accounts for the VAT instead. This example shows the standard case; flag reverse charge on the invoice when it applies.
What a compliant builder's invoice needs
Beyond the figures, an invoice that gets paid promptly carries the basics without being asked twice.
- A unique invoice number, issue date and clear payment due date
- Your business name, address and VAT number (if registered)
- Labour, materials and plant separated so CIS is unambiguous
- Bank details and accepted payment methods
Raise this invoice in ProQuoter
FAQ
- What should a builder's invoice include?
- A unique number, issue and due dates, your details and VAT number, the customer's details, labour/materials/plant separated, any CIS deduction, VAT, the total payable and your bank details. This example shows the lot on one invoice.
- How is CIS shown on an invoice?
- As a deduction on the labour element only. Here 20% of the £4,200 labour is £840, shown as a minus line. Materials (£2,650) and plant (£680) are never subject to CIS. Figures are an illustrative UK example for guidance only — set your own rates, materials and margins in ProQuoter.
- Do I charge VAT and deduct CIS on the same invoice?
- Yes — they're independent. VAT (£1,506) is charged on the full £7,530 net; CIS (£840) is deducted from the labour. The total payable is £8,196, and the contractor pays the £840 CIS to HMRC separately. Check whether the VAT domestic reverse charge applies between CIS-registered businesses.
- What payment terms should a builder use?
- 14 to 30 days is typical. This example uses 14 days with a clearly stated due date. A specific date paid consistently — and chased the day it passes — is worth more than any wording buried in terms.