CIS invoices and monthly statements, worked out for you

Who it’s for

UK subcontractors in construction (sole traders, partnerships and small limited companies) who invoice contractors, and the bookkeepers who look after them

Time to set up

30 minutes once, then about 2 minutes per invoice

Difficulty

Beginner

Monthly cost

£0

Key dates for this: see UK small-business admin deadlines.

Turn my job notes into an invoice to a CIS contractor. Put every cost in one of two columns: LABOUR, or MATERIALS AND OTHER COSTS (only materials I bought myself, plant hire for this job, consumables, and fuel other than for travelling; label which). Use ONLY the prices I give; if anything is missing, add a short note in brackets saying in plain words what to fill in, for example (add your UTR). Show: invoice lines, subtotal, labour total, materials and other costs total, CIS deduction at my rate on the labour only, amount payable. If I say I'm VAT registered and the reverse charge applies, add 'Reverse charge: customer to pay the VAT to HMRC', show the VAT the customer must account for, and do not add it to the amount payable. Then list QUESTIONS FOR ME. British English. Never give tax advice beyond these sums.
My CIS rate: [20% / 30% / 0%]. VAT registered: [yes/no]. Reverse charge applies: [yes/no].
Job notes: [paste or dictate]

Most tradespeople find out how CIS works the first time a payment lands £480 lighter than the invoice. This guide does the sums before that happens: a prompt that turns your job notes into a CIS invoice with the labour and materials split properly, a sheet that predicts each monthly statement, and a check that tells you when a contractor’s figures don’t match.

What does this automation do?

1. You dictate or paste your job notes.
2. ChatGPT splits them into labour and materials, takes the CIS deduction from the labour only, and adds the reverse charge wording if it applies.
3. You log the invoice in a Google Sheet that works out the tax month, the deduction you should see and the amount you should be paid.
4. When the contractor’s monthly payment and deduction statement arrives, you type in three figures and the sheet shows any difference. Make can draft the query email for you.

The statements matter more than they look. They’re your evidence for every pound deducted, and you’ll need them for your Self Assessment (or your company’s payroll claim) to get that money credited back (GOV.UK).

What do you need before you start?

• Your UTR and your CIS status: registered (20%), unregistered (30%) or gross payment status (0%). If you’re not sure, the contractor’s deduction on your last statement tells you.
• Whether you’re VAT registered.
• Receipts for materials you buy. A contractor can ask for evidence, and if you don’t have any, GOV.UK says they’ll estimate the cost of the materials (GOV.UK).
• A free ChatGPT, Claude or Gemini account, and Google Sheets.

How do I set it up?

Step 1: Check CIS applies to this job

CIS applies when a contractor pays you for construction work: builders, developers, labour agencies and gang leaders, plus businesses that have spent more than £3 million on construction in 12 months (GOV.UK: who is covered). It covers most work on buildings, including site preparation, decorating and refurbishment.

It does not apply to:

• Homeowners. HMRC’s CIS 340 guide says “ordinary householders that are having work done on their own premises” aren’t contractors (CIS 340). A kitchen fitted for Mrs Example is a normal invoice.
• Some jobs, including architecture and surveying, scaffolding hire with no labour, carpet fitting and delivering materials (GOV.UK).

Step 2: Give ChatGPT your CIS details and rate

Write a short “My CIS details” note once and keep it in your phone’s notes app: your trading name, address, UTR, VAT number (if you have one), your CIS rate, bank details and payment terms. For each invoice, start a new chat, paste the copy-paste prompt, then your details note, then the job notes. It takes seconds and works on a free account.

Step 3: Turn your job notes into a CIS invoice

Paste or dictate the job as you’d describe it to a mate: days, rates, what you bought, what you hired. The prompt puts every cost into one of two columns, because that’s how the contractor will work it out (GOV.UK):

1. Start with the invoice total.
2. Take away VAT, and what you paid for materials, consumable stores, fuel (except for travelling), plant hire for this job, and manufacturing or prefabricating materials.
3. Apply the CIS rate to what’s left. That’s the deduction.

Worked example (invented business, sums checked):

Dan, a plasterer, is CIS registered and VAT registered. Example Builds Ltd, a VAT-registered builder, hires him for 6 days at £400 a day. Dan buys £270 of plasterboard and £110 of plaster, and hires a mixer for £45.

The same job at the other rates:

Being unregistered costs Dan £240 of cash on this one invoice. It counts towards his tax bill when he files his Self Assessment, but that’s months of his money sitting with HMRC. If you have a UTR, you can register online (GOV.UK).

If Dan weren’t VAT registered, the VAT he paid on materials would be part of their cost. CIS 340 says the deduction comes off “including VAT paid if the subcontractor is not registered for VAT”. So his materials and hire would be £510 (£425 plus 20%), the invoice £2,910, the deduction still £480 (20% of £2,400), and he’d be paid £2,430.

Step 4: Check the split and the reverse charge wording

Read the output before you send it. Two things to check every time.

The split. Only materials you paid for directly go in the right-hand column. If the contractor supplied the plasterboard, it isn’t on your invoice at all. Inflating materials to shrink the deduction is the obvious temptation, and CIS 340 says the contractor “must always check and keep records” and HMRC may recover any under-deduction from them, so expect to be asked for receipts.

The VAT. The domestic reverse charge applies when all of these are true (GOV.UK):

• you and your customer are both VAT registered in the UK
• the payment is reported within CIS
• the work is standard or reduced rated
• the customer hasn’t told you in writing that they’re an end user or intermediary supplier

If it applies, you don’t charge VAT. The invoice must make clear the reverse charge applies and the customer must account for the VAT, and must state the VAT due (or the rate, if the amount can’t be shown). GOV.UK’s examples of acceptable wording are “VAT Act 1994 Section 55A applies”, “S55A VATA 94 applies” and “Customer to pay the VAT to HMRC” (technical guide). Some services, such as installing security systems or the professional work of architects, are outside it (GOV.UK).

We’re not your accountant: if you’re unsure whether the reverse charge applies to a mixed job, ask one before you invoice. Getting VAT wrong is far more expensive than getting CIS wrong.

Step 5: Log the invoice in your CIS sheet

Make a Google Sheet called “CIS log” with a tab called Invoices and these columns:

Formulas for row 2 (copy them down):

• D2 (tax month): =IF(DAY(C2)>=6, DATE(YEAR(C2), MONTH(C2)+1, 5), DATE(YEAR(C2), MONTH(C2), 5)). Tax months run from the 6th to the 5th, so a payment on 23 October 2026 falls in the month ending 5 November 2026. December payments roll into January correctly.
• G2: =E2+F2
• I2: =ROUND(E2*H2, 2) (type the rate as 20%, 30% or 0%)
• J2: =G2-I2

Use the date you were paid, not the date you invoiced: statements cover payments made in the tax month.

Step 6: Check each monthly statement against your log

Each month your contractor must give you a payment and deduction statement within 14 days of the end of each tax month (GOV.UK). For the month ending 5 November, that’s by 19 November. CIS 340 says it must include:

• the contractor’s name and employer tax reference
• the end date of the tax month (or the payment date, if it covers one payment)
• your name and UTR
• your verification number, if you were deducted at the higher 30% rate
• the gross amount paid
• the cost of materials that reduced the amount the deduction was taken from
• the amount deducted

Add a Statements tab with: Contractor, Tax month ends, Gross on statement, Materials on statement, Deduction on statement. Next to them, pull your expected figures from the log:

=SUMIFS(Invoices!I:I, Invoices!B:B, A2, Invoices!D:D, B2) gives the deduction you expected, and =E2-F2 (statement minus expected) shows the difference. Anything other than £0.00 needs a look.

Example. Example Builds paid Dan twice in the month ending 5 November 2026: the £2,825 invoice above, and a £1,350 invoice (£1,200 labour, £150 materials). Your log expects gross £4,175, materials £575 and a deduction of £720 (£480 + £240), so £3,455 paid. If the statement says £750 deducted, the contractor has probably missed the materials on the second invoice (20% × £1,350 = £270, not £240). Speak to them, as GOV.UK suggests, and keep the corrected statement. Lost one? Ask for a replacement, which should be marked “Duplicate”.

Step 7: Optional: let Make flag a mismatch

If you’re checking several contractors, a small Make scenario can watch the Statements tab and draft the query for you:

1. Google Sheets › Watch New Rows on the Statements tab.
2. Google Sheets › Search Rows on the Invoices tab, filtered by contractor and tax month.
3. A numeric aggregator to sum the expected deduction.
4. A filter: carry on only if the statement deduction differs from the sum.
5. Gmail › Create a draft to the contractor, quoting the tax month, both figures and the invoice numbers. It’s a draft, so you read it before it goes.

Make Free covers this at a few statements a month. We haven’t run this scenario end to end yet; the sheet in Step 6 does the same job by eye.

The copy-paste prompt

Turn my job notes into an invoice to a CIS contractor. Put every cost in one
of two columns: LABOUR, or MATERIALS AND OTHER COSTS (only materials I bought
myself, plant hire for this job, consumables, and fuel other than for
travelling; label which). Use ONLY the prices I give; if anything is missing,
add a short note in brackets saying in plain words what to fill in, for
example (add your UTR). Show: invoice lines, subtotal, labour total, materials
and other costs total, CIS deduction at my rate on the labour only, amount
payable. If I say I'm VAT registered and the reverse charge applies, add
'Reverse charge: customer to pay the VAT to HMRC', show the VAT the customer
must account for, and do not add it to the amount payable. Then list QUESTIONS
FOR ME. British English. Never give tax advice beyond these sums.
My CIS rate: [20% / 30% / 0%]. VAT registered: [yes/no]. Reverse charge
applies: [yes/no].
Job notes: [paste or dictate]

What UK rules apply?

• Deduction rates. 20% registered, 30% unregistered (or if the contractor can’t verify you), 0% with gross payment status (GOV.UK). Deductions count as advance payments towards your tax and National Insurance.
• Getting the money back. Sole traders and partners put total pay before deductions as income and the deductions as “CIS deductions” on their Self Assessment. Limited companies offset them through payroll on the EPS, not the Corporation Tax return (GOV.UK).
• Gross payment status. You need to have paid tax on time, run the business through a bank account, and have turnover (ignoring VAT and materials) of at least £30,000 a year as a sole trader, with higher tests for partnerships and companies (GOV.UK).
• Keeping gross payment status after April 2026. Since 6 April 2026, HMRC can remove it immediately if a business “knew or should have known” a transaction was connected to tax fraud, make it liable for the lost tax, charge a penalty of up to 30% (directors too), and bar it from reapplying for 5 years (GOV.UK). In plain English: know who you’re working for and who you’re paying. Labour you can’t explain, from firms that keep vanishing, is the pattern HMRC describes.
• If you take on subcontractors yourself, you become a contractor: register before your first one, verify them, file a monthly return by the 19th (a nil return if you paid no one, reinstated from 6 April 2026), and give statements. A return 1 day late is a £100 penalty (GOV.UK).

What can go wrong?

• Applying CIS to a homeowner. They aren’t contractors. Invoice them normally.
• Deducting from the whole invoice. The deduction comes off labour only. If a payment looks 20% short of the full total, check the contractor took materials off first.
• Charging VAT under the reverse charge. If it applies and you add VAT anyway, the customer has paid you tax they should have accounted for themselves, and someone has to unpick it. Check with your accountant if you’re unsure.
• No receipts for materials. The contractor can estimate the cost, and estimates rarely go your way.
• Missing statements. Chase them at the 14-day mark. If a contractor has gone bust, GOV.UK tells you what to send HMRC instead (GOV.UK).
• Data. Only paste what the prompt needs. Your UTR can live in your details note; your customers’ personal details don’t need to go into an AI tool.

Quoting comes first: our guide to turning a voice note into a written quote gets the job priced the same day. And if a contractor is slow to pay what’s left after the deduction, chase it automatically. One automation like this lands in your inbox every Friday if you join our free email.

Frequently asked questions

Sources

1. GOV.UK: What you must do as a CIS subcontractor
2. GOV.UK: CIS subcontractors: get paid (deduction rates, statements)
3. GOV.UK: How to get gross payment status
4. GOV.UK: Pay tax and claim back deductions
5. GOV.UK: CIS contractors: make deductions and pay subcontractors
6. GOV.UK: CIS contractors: file your monthly returns
7. GOV.UK: CIS contractors: who is covered by CIS
8. HMRC: Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340), updated 27 August 2026
9. GOV.UK: Tackling Construction Industry Scheme fraud
10. GOV.UK: Check when you must use the VAT domestic reverse charge for building and construction services
11. GOV.UK: How to use the VAT domestic reverse charge if you supply building and construction services
12. GOV.UK: VAT domestic reverse charge technical guide

This guide is general information, not legal, tax or financial advice. Tool prices and screens change; we re-check every guide regularly. Spotted something out of date? Tell us and we’ll fix it.