Subcontractor Invoice Template UK 2026: What to Include, CIS Deductions and VAT
Written by Tom Ellis · Senior Trades Editor
Last updated: July 2026
Quick Answer
A UK subcontractor invoice must include your name, address, UTR number, a unique invoice number, description of work, gross labour amount, CIS deduction (20% or 30% of labour), net payable, and materials listed separately. If both you and the contractor are VAT-registered, you must apply the VAT Domestic Reverse Charge instead of adding 20% VAT. Materials are never subject to CIS deduction.
Subcontractor invoicing under CIS is more complex than a standard invoice — get it wrong and the contractor may deduct the wrong amount, HMRC may dispute your records, or your tax refund gets delayed. This guide covers exactly what to include, how to calculate the deduction, and what changes when VAT is involved.
What to Include on a UK Subcontractor Invoice
The following fields are required on every CIS subcontractor invoice:
| Field | Details |
|---|---|
| Invoice number | Unique sequential number (e.g. INV-001, INV-002) |
| Invoice date | Date invoice is issued |
| Your name / business name | Full name or registered business name and address |
| Contractor name | Full name or company name of the contractor you are invoicing |
| UTR number | Your 10-digit Unique Taxpayer Reference (required for CIS) |
| Description of work | Brief description and site address where work was carried out |
| Gross labour | Total labour charge before CIS deduction |
| Materials | Listed separately — not subject to CIS deduction |
| CIS deduction | Amount deducted (20% or 30% of gross labour only) |
| Net payable | Amount the contractor pays you (gross labour − CIS + materials) |
If you are VAT-registered, also include your VAT registration number. Whether you add VAT or apply domestic reverse charge depends on whether the contractor is also VAT-registered — see below.
CIS Invoice Calculation: Worked Example
Here is a worked example for a verified subcontractor (20% CIS deduction rate) with materials:
The contractor pays you £2,450 and remits £400 directly to HMRC. That £400 counts as an advance payment toward your tax bill — you declare the full £2,000 labour income on your self-assessment return, then offset the £400 already paid.
For an unverified subcontractor, the deduction rate is 30%. Materials always pass through at full cost with no CIS deduction.
VAT and Domestic Reverse Charge
The VAT Domestic Reverse Charge (DRC) applies to most construction services under CIS where both the subcontractor and contractor are VAT-registered. Under DRC:
- You do not add 20% VAT to your invoice
- The contractor accounts for the VAT themselves (both the input and output tax)
- Your invoice must state: "Domestic Reverse Charge — the customer is required to account for VAT on this supply"
- You must also show the VAT rate that would apply (20%) and the amount that would have been charged, even though the contractor pays it
When DRC does NOT apply:
- The contractor is an end user (e.g. a homeowner or business using the building themselves)
- You or the contractor are not VAT-registered
- The supply is zero-rated (certain new build work)
If you invoice directly to a homeowner, normal 20% VAT rules apply — no DRC. DRC only applies in the subcontractor-to-contractor chain.
Common Subcontractor Invoice Mistakes to Avoid
- Deducting CIS from materials — CIS only applies to the labour element, not materials. Deducting from both means you are underpaid.
- Not including your UTR — without your UTR, the contractor cannot verify your CIS status and may apply the 30% unverified rate.
- Adding VAT when DRC should apply — if both parties are VAT-registered and DRC applies, adding VAT creates an incorrect invoice and potential HMRC penalty for the contractor.
- Using the wrong deduction rate — verify your CIS status with HMRC every time you work for a new contractor. Status is checked per contractor, not blanket across all work.
- Not keeping a copy — HMRC can request records going back 6 years. Keep a copy of every invoice issued, with the corresponding payment confirmation.
Free Subcontractor Invoice Template Options
You can create a compliant subcontractor invoice using:
- Sleepless Tradesman (free tier) — generates CIS-compliant invoices with automatic deduction calculation, VAT, and DRC handling
- Microsoft Word or Excel template — set up the fields manually; you must calculate the CIS deduction yourself
- Google Sheets — free, shareable, can set up formulas for CIS calculation once and reuse
- FreeAgent / QuickBooks — accounting software with CIS module built in; from £10 a month (QuickBooks Sole Trader) to £19 a month (FreeAgent sole trader), as of October 2026
The advantage of using an app over a manual template is that CIS rates, VAT rules, and DRC status are handled automatically — reducing the risk of an error that causes payment disputes or HMRC queries. See our guide on CIS for subcontractors for more detail on how the scheme works.
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