CIS and Reverse Charge Wording for Your Quote (Copy and Paste)

If you sub to other builders, two tax regimes reach into your paperwork: the Construction Industry Scheme (CIS), which makes the contractor deduct tax from your labour, and the domestic reverse charge, which flips who accounts for the VAT. Neither is complicated once the right sentences are on the document — and both cause payment delays when they're missing.

This guide is the sentences. Copy the blocks, fill the brackets, move on. It's written for the person writing the quote at 9pm, not for an accountant — though your accountant should still confirm which situation applies to you.

First, which of these is you?

You work directly for homeowners — CIS and the reverse charge don't apply to those jobs. Quote VAT normally (if registered) and skip this article, though the contractor quote guide is where your paperwork wins jobs.
You subcontract to a contractor or builder — CIS applies to the payment, and if you're both VAT-registered the reverse charge almost certainly applies to the VAT. The blocks below are for you.
You use subcontractors — read the same blocks from the other side: this is what a correct invoice from your subbie looks like.

The CIS block for your quote

CIS deductions are taken from the labour element only — never from materials. So a CIS-friendly quote splits the two. The deduction rate (2026, unchanged for years):

20% if you're CIS-registered
30% if you're not registered (register — it's free and immediate money)
0% if you hold gross payment status

Copy this into quotes for contractor clients:

CIS INFORMATION

This quotation is split between labour and materials for 
CIS purposes:

  Labour:     £[X,XXX]
  Materials:  £[X,XXX] (at cost, no deduction applies)

We are registered under CIS — deductions at 20% apply to 
the labour element only.
UTR: [XXXXXXXXXX]
[Company/trading name exactly as registered with HMRC]

Why it helps you get paid: the contractor must "verify" you with HMRC before first payment, using your UTR and exact registered name. Put both on the quote and there's nothing to chase; leave them off and your first payment waits while someone emails you for them — or worse, fails verification on a name mismatch and deducts 30%.

One thing to check: the deduction is not lost money — it's tax paid in advance, set against your bill at year end (or reclaimed). But cash-flow-wise, price contractor work knowing 20% of the labour arrives later. Your day rate needs to be right before a fifth of it goes to HMRC first.

The reverse charge block

Since March 2021, most construction services supplied business-to-business between VAT-registered, CIS-covered parties use the domestic reverse charge: you do not charge VAT; your customer accounts for it themselves. It applies to standard-rated and reduced-rated work, and once it applies to the labour it normally covers the whole supply, materials included.

It does not apply when your customer is the "end user" (they're not selling the construction service on — e.g. a property owner, or a business having its own premises done) — but only if they tell you so in writing. No statement, and B2B between VAT/CIS-registered parties defaults to reverse charge.

Copy this onto quotes and invoices where it applies:

VAT — DOMESTIC REVERSE CHARGE

Reverse charge: customer to pay the VAT to HMRC.

No VAT is charged on this invoice. This supply falls 
within the domestic reverse charge for building and 
construction services. VAT of £[X,XXX] (20% on £[XX,XXX]) 
is to be accounted for by the customer.

Our VAT no:  [GB XXX XXXX XX]

The first sentence is the wording HMRC expects to see; the rest makes the numbers unambiguous (you must still show the VAT amount or rate the customer has to account for, even though you're not charging it).

And when your customer says they're an end user, keep their statement — this is what you ask them to send:

END USER STATEMENT (from your customer)

We confirm we are an end user for the purposes of s55A 
VAT Act 1994 (reverse charge for building and 
construction services). Please issue invoices with VAT 
charged in the normal way.

Putting it together: a subcontractor invoice that gets paid

INVOICE [no.] — [Your company], UTR [XXXXXXXXXX]
To: [Contractor], for works at [site address]

Labour                              £4,000.00
Materials (at cost)                 £1,500.00
                                   ──────────
Total payable to us                 £5,500.00

Reverse charge: customer to pay the VAT to HMRC.
VAT to be accounted for by the customer: £1,100.00 
(20% on £5,500.00).

For the contractor's CIS return: deduction of 20% 
applies to the labour element (£4,000.00) = £800.00.
Amount due after CIS deduction: £4,700.00.

Note the order of operations: the reverse charge changes the VAT treatment but doesn't change the CIS calculation — the deduction still comes off the labour, and never off VAT (there's no VAT on the invoice to deduct from anyway).

The mistakes that delay payment

Not splitting labour and materials. The contractor can't run the CIS deduction without the split, so the invoice goes into a queue while someone asks. Split it on the quote, carry it to the invoice.

Charging VAT when the reverse charge applies. The contractor's software (or accountant) will bounce the invoice back for reissue — a fortnight gone. If both of you are VAT- and CIS-registered and no end-user statement exists, reverse charge it.

Reverse-charging a homeowner. The reverse charge is B2B only. Domestic customers get normal VAT invoices, always.

Accepting "we'll sort the CIS at our end" verbally. Put your UTR and registered name on the paperwork so verification happens against the right details. A name mismatch means a 30% deduction instead of 20% — real money on a £20k labour bill.

Forgetting it flows through your accounts differently. Reverse charge sales still go on your VAT return (box 6), and if most of your work is reverse-charged you may become a repayment trader — worth a conversation with your accountant about monthly returns. If your quotes push into Xero or another accounts package, set the tax treatment there once and stop thinking about it.

Related guides

Free CIS deduction calculator — what you'll be paid, or what to invoice
How to write a contractor quote that wins jobs
A quoting app that works with Xero and QuickBooks
Builder estimate template

Frequently Asked Questions

What are the CIS deduction rates?

20% for registered subcontractors, 30% if you're unregistered, 0% with gross payment status — applied to the labour element only, never materials or VAT. Rates checked 31 August 2026; they've been stable for years.

What wording goes on a reverse charge invoice?

"Reverse charge: customer to pay the VAT to HMRC" (or equivalent), no VAT charged, and the VAT amount or rate the customer must account for shown on the document. The copy-paste block above covers it.

Does the reverse charge apply to materials?

Once the reverse charge applies to the service, it normally applies to the whole supply including materials — you don't split the VAT treatment within one invoice, even though CIS deductions only touch the labour.

Do CIS and the reverse charge apply to homeowner jobs?

No. Both are for the contractual chain between businesses. Working directly for a homeowner, you quote and charge VAT the normal way — which is most of the audience for a typical trade quote.

Stop Losing Jobs on Paperwork

Speqly turns your site photos into a professional, priced, itemised proposal in about 10 minutes — with labour and materials already separated, which is exactly what CIS paperwork needs.

Try Speqly free → speqly.com