If you work in the construction industry, you may be registered with the Construction Industry Scheme (If you are not sure what CIS is, read the HMRC Guidance for CIS Subcontractors).

When you invoice a Contractor as a Subcontractor, you're required to deduct a default of 20% from the relevant amount. This means, when the payment comes into your account, Coconut will only see the net payment amount (the amount with tax deduction already applied).

You'll need to Add back CIS deduction to your transaction to ensure that:

  • Your income totals are correct for your self-assessment

  • You see the correct tax savings suggestion in the tax tab

  • You can see the amount the contractor has already paid on your behalf

This should be for the amount the contractor deducted from your original invoice.

For example, if you invoice the contractor for £1,000 and they pay you £800 (20% deducted), you'll need to tell Coconut about the extra £200.

If you would like to know how you can raise a CIS invoice, read our guidance.

How to add back the CIS deduction

Below we explain, step by step, how you can add the CIS deduction in Coconut. This is now available on iOS, Coconut Web, and for your accountant if you have one, on the Accountant Portal.

Web

Step 1

Head over to your client’s bookkeeping tab and find the income relating to CIS.

Step 2

Click the three dots on the right hand side and select ‘Add back CIS deduction’.

Step 3

This will open up a window asking you to add a CIS deduction. As a default, the rate will be set to 20%, but you can easily edit it if you need to – e.g. if the cost of materials was included in the payment, or if your client has not registered for CIS and is therefore on the 30% rate.

Step 4

Clicking on “Add” will automatically create two adjustments: the income 'gross up' for the additional amount on your invoice (to ensure your income totals are correct) and a “tax withholding” for the deducted amount (so we can report on the amount the contractor has paid on your behalf).

You can always delete or update the values on the transactions by following the same steps, but using the 'Update CIS deduction'.

App (iOS)

Step 1

Head over to your transactions list and select the transaction for which you want to add back the deduction.

Step 2

Tap on the three dots on the right hand side and select ‘Add back CIS deduction’.

Step 3

This will open up a modal asking you to add a CIS deduction. As a default, the rate will be set to 20%, but you can easily edit it if you need to – e.g. if the cost of materials was included in the payment, or if your client has not registered for CIS and is therefore on the 30% rate.

Step 4

Clicking on “Add” will automatically create two adjustments: the income 'gross up' for the additional amount on your invoice (to ensure your income totals are correct) and a “tax withholding” for the deducted amount (so we can report on the amount the contractor has paid on your behalf).

You can always delete or update the values on the transactions by following the same steps, but using the 'Update CIS deduction'.


Read more:

Did this answer your question?