If you work for homeowners, your invoice is fairly simple. If you work as a subcontractor for another builder under the Construction Industry Scheme (CIS), it gets trickier: the contractor deducts tax from your labour, and if you're VAT registered the domestic reverse charge may apply too.
This post gives you a free invoice template for both situations, with worked examples you can copy. It's general guidance, not tax advice; check with your accountant or HMRC if you're unsure about your own position.
What every trade invoice needs
- Your business name, address and contact details
- A unique invoice number and the invoice date
- The client's name and address (and site address if different)
- A description of the work and the date or period it was done
- The amount due, with labour and materials shown separately
- Payment terms (for example, due within 14 days) and how to pay
If you're VAT registered, a VAT invoice must also show your VAT number, the VAT rate and the VAT amount for each item, and the total VAT.
How CIS changes the invoice
Under CIS, when a contractor pays a subcontractor for construction work, they deduct tax from the payment and pass it to HMRC. The deduction is:
- 20% if you're registered for CIS
- 30% if you're not registered
- 0% if you have gross payment status
Crucially, the deduction applies to labour only. It doesn't apply to VAT, or to the cost of materials you bought for the job. That's why showing labour and materials separately on your invoice matters so much. If you lump them together, you risk tax being deducted from your materials too.
The contractor should give you a payment and deduction statement each month. Keep these: they're your proof of tax already paid when you do your tax return.
The template
[YOUR BUSINESS NAME] · [Address] · [Phone] · [Email]
UTR: [your Unique Taxpayer Reference]
VAT number: [if registered]
INVOICE
Invoice number: INV-0001
Invoice date: [date]
Work period: [start date] to [end date]
Bill to: [Contractor name and address]
Site: [Site address]
Contractor's job ref: [if given]
DESCRIPTION AMOUNT
Labour: [description of work] £
Materials: [description, supplier receipts] £
-------
Subtotal (net) £
VAT [see note below] £
CIS deduction ([20%] of labour) -£
-------
AMOUNT PAYABLE £
VAT note (choose one):
- Not VAT registered
- VAT at 20%: £[amount]
- Reverse charge: customer to account to HMRC for the VAT.
VAT at 20% under the reverse charge: £[amount]
Payment terms: due within [14] days
Bank: [Account name] · Sort code: [xx-xx-xx] · Account: [xxxxxxxx]
Reference: [invoice number]Worked example 1: CIS subcontractor, not VAT registered
You're a CIS-registered joiner, not VAT registered. You've done £2,000 of labour and bought £500 of materials for the job.
| Line | Amount |
|---|---|
| Labour | £2,000 |
| Materials | £500 |
| Subtotal | £2,500 |
| CIS deduction (20% of £2,000 labour) | −£400 |
| Amount payable | £2,100 |
The contractor pays you £2,100 and pays the £400 to HMRC on your behalf.
Worked example 2: CIS subcontractor, VAT registered, reverse charge applies
Same job, but you're VAT registered and the contractor is VAT registered and CIS registered, and isn't the end user. The domestic reverse charge applies, so you don't charge VAT; the contractor accounts for it instead.
| Line | Amount |
|---|---|
| Labour | £2,000 |
| Materials | £500 |
| Subtotal | £2,500 |
| VAT | £0 (reverse charge: customer to account for VAT of £500 to HMRC) |
| CIS deduction (20% of £2,000 labour) | −£400 |
| Amount payable | £2,100 |
The contractor accounts for the VAT. The worked example below shows the invoice maths. GOV.UK's reverse charge guidance is the official source.
Worked example 3: homeowner job, VAT registered
CIS doesn't apply to work for private homeowners, and neither does the reverse charge. You charge VAT as normal.
| Line | Amount |
|---|---|
| Labour | £2,000 |
| Materials | £500 |
| Subtotal | £2,500 |
| VAT at 20% | £500 |
| Total | £3,000 |
Common CIS invoicing mistakes
- Not separating materials from labour, so tax is deducted from the whole amount.
- Inflating materials to reduce the deduction. HMRC can challenge this; only include genuine material costs.
- Charging VAT when the reverse charge applies, or not charging it when it doesn't.
- Losing payment and deduction statements. You'll need them for your tax return.
- Invoicing late. CIS payments still depend on you sending a clear invoice promptly.
For more on the contractor side, see our guide to what to record before you pay a subcontractor.
How Tradeways helps
In Tradeways you build invoices straight from your accepted proposals, with labour and materials as separate lines, your saved bank details and terms, and Stripe card payments if the client prefers. Overdue invoices are easy to spot, and a payment reminder is ready to send. Your accountant can see invoices and finances through their own included seat.