How Do I Claim for Materials Supplied on a CIS Job

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS deductions, refunds, verification, and monthly return responsibilities, without jargon. Our aim is to help you stay compliant with HMRC, avoid penalties, and keep your cash flow and records under control.

This is one of the most common CIS questions I am asked, and it usually comes after someone has noticed that far more tax has been deducted than they expected. A subcontractor supplies materials as part of a job, invoices the contractor, then sees CIS deducted on the full amount rather than just the labour. Immediately the worry sets in, have I done something wrong, have I lost money, and can I still claim for the materials I paid for.

From my experience running my own accountancy firm and working closely with construction businesses, claiming for materials on CIS jobs is an area where small misunderstandings cause big cash flow problems. The rules themselves are not complicated, but they are very specific, and if they are not followed properly at the invoicing stage, the consequences show up quickly in deductions.

In this article, I am going to explain clearly how materials are treated under CIS, how you should invoice for them, how contractors should apply deductions, and what happens if things go wrong. I will also explain how materials feed into your tax return and what you can do if CIS has been deducted incorrectly. By the end, you should feel confident about how to claim for materials supplied on a CIS job and how to avoid unnecessary tax being taken.

How CIS Treats Labour and Materials Differently

The starting point for understanding materials under CIS is this, CIS deductions apply only to the labour element of a subcontractor’s payment, not to materials.

This is a fundamental rule of the Construction Industry Scheme, but it is also the area where most errors occur.

When you carry out work on a CIS job, the total amount you charge the contractor is usually made up of different elements. These typically include labour, materials you have supplied, and sometimes other costs such as plant hire. Under CIS, only the labour element is subject to deduction.

Materials that you have paid for and supplied as part of the job should not have CIS tax deducted from them, provided they are invoiced correctly.

This distinction is crucial, because if materials are not clearly separated, contractors may apply CIS to the full invoice amount.

What Counts as Materials Under CIS

Materials under CIS generally include physical items that you have purchased and used as part of the construction work.

This can include things like bricks, timber, plasterboard, cables, pipes, fixings, tiles, insulation, and similar items that become part of the finished work. It can also include consumables used directly in the job.

The key point is that these are costs you have incurred and passed on to the contractor as part of the job, not part of your labour charge.

Materials must be genuine materials costs. Inflating material values to reduce CIS deductions is not allowed and can lead to HMRC issues.

Materials That Are Not Treated as Materials

Not everything you might charge on an invoice counts as materials for CIS purposes.

Your own tools are not materials
Fuel used to travel to site is not materials
General overheads are not materials
Your time spent sourcing materials is still labour

These costs are legitimate business expenses, but they do not reduce CIS deductions at the invoicing stage. They are dealt with later through your tax return instead.

Understanding this difference avoids disputes with contractors and reduces the risk of deductions being challenged.

How to Invoice for Materials on a CIS Job

The single most important step in claiming for materials on a CIS job is invoicing correctly.

Your invoice must clearly separate labour and materials. This is not optional. If materials are not shown separately, the contractor is entitled to treat the entire invoice as labour and deduct CIS accordingly.

A good CIS invoice will clearly show:.

• The labour charge

• The materials supplied

• Any VAT charged if you are VAT registered

Materials should be listed as a separate line or section, with a clear value. This allows the contractor to calculate CIS deductions correctly.

From my experience, most CIS problems with materials arise because invoices are vague, unclear, or bundled into one total.

How Contractors Should Apply CIS Deductions

Once your invoice clearly separates labour and materials, the contractor should apply CIS deductions only to the labour element.

For example, if you invoice £2,000 for labour and £1,000 for materials, CIS should be calculated on the £2,000, not the £3,000 total.

The contractor then pays you:.

• The full materials amount

• The labour amount minus CIS tax

If VAT applies, VAT is added to the invoice total and CIS is calculated before VAT, not on the VAT amount.

This process ensures that you are not out of pocket for materials you have already paid for.

VAT and Materials on CIS Jobs

VAT adds another layer of complexity, but the principle remains the same.

If you are VAT registered, you charge VAT on both labour and materials as normal. CIS is calculated on the labour amount excluding VAT.

This means VAT is never subject to CIS deductions.

It is important that VAT is shown clearly on the invoice, as poor VAT presentation often leads to incorrect CIS calculations by contractors.

What Happens If CIS Is Deducted on Materials

Despite clear rules, it is very common for CIS to be deducted incorrectly on materials.

This usually happens when:.

• Materials are not shown separately

• Invoices are unclear

• Contractors apply CIS to the full invoice by default

If CIS is deducted on materials, the first thing to understand is that the tax is not lost.

The deduction will appear on your CIS record and can be reclaimed later through your tax return. However, this does not help short term cash flow, which is why it is always better to get it right upfront.

Where possible, incorrect deductions should be challenged early, and invoices clarified or reissued if necessary.

Keeping Records of Materials Supplied

Good record keeping is essential when claiming for materials on CIS jobs.

You should keep:.

• Supplier invoices for materials purchased

• Copies of CIS invoices issued

• CIS deduction statements from contractors

These records support the material values you have charged and are vital if HMRC ever queries the figures.

In my experience, subcontractors who keep clear material records rarely have problems defending their position.

How Materials Are Treated on Your Tax Return

Claiming for materials on a CIS job does not end at invoicing. Materials also play a role in your tax return.

For sole traders and partnerships, materials are an allowable business expense. They reduce your taxable profit and therefore your final tax bill.

For limited companies, materials are recorded as a cost of sales or expense in the company accounts.

This is separate from CIS deductions. Even if materials were deducted incorrectly under CIS, they are still allowable expenses for tax purposes.

Why Materials Can Cause CIS Overpayments

Materials are one of the main reasons CIS overpayments occur.

If CIS is deducted on the full invoice including materials, you are effectively paying tax on money that simply reimburses you for costs. When expenses are later deducted in the tax return, this often results in an overpayment and a refund.

While refunds are common, relying on this is not ideal, especially for cash flow.

Getting materials treated correctly at the invoicing stage reduces the size of overpayments and speeds up refunds.

Common Mistakes I See With Materials and CIS

Over the years, there are a few recurring mistakes I see.

Materials not separated on invoices
Materials estimated rather than based on actual costs
Contractors misunderstanding CIS rules
VAT and CIS mixed up
Poor record keeping

Each of these increases the risk of incorrect deductions and disputes.

What to Do If a Contractor Refuses to Adjust CIS

Sometimes a contractor will refuse to adjust CIS deductions, even when materials are clearly shown.

In that situation, your options are limited in the short term. Contractors are responsible for CIS calculations, and HMRC places the liability on them.

However, you can still reclaim the overpaid tax through your tax return. You should also consider whether continuing to work with a contractor who consistently applies CIS incorrectly is in your best interest.

How an Accountant Helps With Materials and CIS

This is an area where professional advice makes a real difference.

An accountant can help you structure invoices correctly, review CIS statements, reconcile deductions, and ensure materials are treated properly in your accounts and tax returns.

I often find that once invoicing templates are corrected, CIS problems around materials reduce dramatically.

Practical Advice From Experience

From years of dealing with CIS materials issues, a few practical points stand out.

Always separate labour and materials clearly
Keep supplier invoices for materials
Check CIS statements against invoices
Query incorrect deductions early
Do not inflate material values

These habits protect both cash flow and compliance.

Final Thoughts

Claiming for materials supplied on a CIS job is not complicated, but it does require care and consistency.

Under CIS, materials should not be subject to tax deductions, provided they are invoiced correctly. When things go wrong, the tax can usually be reclaimed, but that is a slower and less efficient solution than getting it right from the start.

In my experience, most CIS material issues are preventable with clear invoicing and good record keeping. Once those foundations are in place, CIS becomes far easier to manage and far less stressful.

If you regularly supply materials as part of CIS jobs and are unsure whether deductions are being applied correctly, it is well worth reviewing your invoices and processes. A small change at the front end can make a significant difference to cash flow and peace of mind.

You may also find our guidance on What expenses can CIS subcontractors claim and what is a cis deduction helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.