Recording CIS Bills
Create bills with CIS deductions that split labour and materials
When you receive an invoice from a CIS subcontractor, create a bill with the CIS deduction automatically calculated.
Creating a CIS Bill
- Go to Documents > Bills > New Bill
- Select a supplier that is marked as a CIS subcontractor
When you select a CIS subcontractor, the CIS deduction section appears automatically on the right-hand side of the bill form.
Entering CIS Details
The CIS section shows:
- Labour Cost — Enter the amount of the payment that is for labour/services
- Materials Cost — Enter the amount for materials supplied by the subcontractor
- Deduction Rate — Pre-filled from the supplier's tax treatment, but you can override it
- Deduction Amount — Automatically calculated: Labour Cost × Deduction Rate
- Net Payment — The amount you actually pay the subcontractor: Total − Deduction
Example
A subcontractor submits an invoice for £5,000:
- Labour: £3,500
- Materials: £1,500
- Tax treatment: Net (20%)
| Item | Amount |
|---|---|
| Total invoice | £5,000 |
| Labour cost | £3,500 |
| Materials cost | £1,500 |
| CIS deduction (20% of £3,500) | £700 |
| Net payment to subcontractor | £4,300 |
You pay the subcontractor £4,300 and pay the £700 deduction to HMRC.
Paying a CIS Bill
A CIS bill's Amount Due is the net payment: the total less the CIS deduction. Record Payment proposes that figure and shows the deduction on its own line as CIS deduction (paid to HMRC); paying it marks the bill paid.
In the books, each payment clears the supplier for what it paid plus its share of the deduction, and puts that share on 2230 CIS Tax Deducted: the deduction is made when you pay, as HMRC require. Part payments each take their part, and together they move exactly the whole deduction. A cash-basis business books the same when the bill is paid: the net from the bank, the deduction to 2230. When you pay HMRC for the month, post that payment against 2230 to clear it.
Important Notes
- CIS deductions only apply to the labour portion, never to materials
- The bill total remains the full amount (labour + materials); the amount due to the subcontractor is the total less the deduction you withhold for HMRC
- Make sure the labour + materials roughly corresponds to the bill total
- CIS bills can be automatically imported into CIS returns