The tax a UK payer deducts at source from a subcontractor, a lender, a rights owner or a landlord abroad, and what is left to pay.
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Enter an amount to see the deduction.
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Some payments in the UK have tax taken off before they are made: the payer deducts it and pays it to HMRC. Choose the type of payment and enter the amount: the calculator shows the deduction, the net payment and every step, for Construction Industry Scheme (CIS) payments, yearly interest, royalties and rent paid to a landlord who lives abroad. It works backwards from a net amount too. PAYE on wages is a different system and is not covered here.
CIS deductions are 20% for registered subcontractors, 30% for unregistered ones and 0% for those with gross payment status. Yearly interest, royalties and rent to a landlord abroad have tax deducted at the basic rate of Income Tax, which is 20% for the 2026 to 2027 tax year.
Start from the subcontractor’s invoice without VAT. Take off what they paid for materials, consumable stores, fuel (except for travelling), plant hire and prefabricated materials for the job; if they are not VAT-registered, include the VAT they paid on those materials. The deduction is the CIS rate applied to what is left. Enter the VAT separately: it is added to the payment and never has tax deducted from it. HMRC’s worked example in the CIS 340 guide rounds the deduction down to the penny, and so does this calculator.
A company or local authority paying yearly interest, or anyone paying it to a person whose usual home is outside the UK, deducts tax at the basic rate (Income Tax Act 2007, section 874). Patent royalties, and royalties for the use of intellectual property owned by someone whose usual home is outside the UK, have tax deducted at the basic rate too (sections 903 and 906). A double taxation treaty may lower the rate: choose “Other rate” to apply the treaty rate. From 6 April 2027, the start of the 2027 to 2028 tax year, the Finance Act 2026 has interest deducted at the savings basic rate instead.
Under the Non-resident Landlord Scheme, a letting agent, or a tenant paying more than £100 a week, adds up the rent for the quarter, takes off the deductible expenses they paid, and deducts tax on the rest at the basic rate. Enter the expenses as “Materials or deductible expenses”. The tax is paid to HMRC within 30 days of the end of each quarter.
If a subcontractor or a supplier expects a set amount after tax, choose “Net, after deduction”: the calculator finds the gross that leaves exactly that net, to the penny. With materials, they stay outside the deduction.
Deduction = (gross − materials or expenses) × rate, rounded to the penny (down for CIS).
Net payment = gross − deduction; with CIS, the amount to pay is the net payment plus VAT.
From a net amount: gross = (net − rate × materials) ÷ (1 − rate), adjusted to the penny so that the deduction leaves exactly the net.
A tiler who is not VAT-registered invoices £600, of which £240 is materials. The amount liable to deduction is £600 − £240 = £360. At 20% the contractor deducts £72 and pays the tiler £528 (HMRC, CIS 340, example D2). For rent, a tenant pays £1,500 for a quarter, including £200 for plumbing repairs: tax at 20% on £1,300 is £260 (GOV.UK’s Non-resident Landlord Scheme example).
Take the invoice total without VAT, subtract the cost of materials, plant hire, fuel and consumables the subcontractor paid for the job, and apply the rate HMRC gave you when you verified them: 20%, 30% or 0%. Pay the subcontractor the invoice total less the deduction, and give them a payment and deduction statement within 14 days of the end of the tax month.
No. When the subcontractor charges VAT, the deduction is worked out on the payment without VAT, and for a VAT-registered subcontractor the materials are taken off without VAT too. In CIS 340, a £600 job plus £120 VAT with £200 of materials gives a deduction of £80 and a payment of £640.
This calculator has no dividend type. GOV.UK’s guide to tax on dividends has shareholders report dividends above their allowances to HMRC and pay the tax through Self Assessment or their tax code, rather than the company deducting it.
The basic rate of Income Tax, 20% for 2026 to 2027, unless an exception applies. A double taxation treaty may reduce it, but check the treaty and HMRC’s procedure before applying a lower rate. From 6 April 2027 the deduction uses the savings basic rate.
No. CIS deductions count as advance payments towards the subcontractor’s tax and National Insurance bill, which is settled later through their tax return.
In HMRC’s example payment and deduction statement, 20% of £4,865.64 (£973.128) is shown as £973.12. The calculator follows that example; the difference is never more than a penny.
This calculator gives general information, not legal, tax, financial or accounting advice. The right deduction depends on the payment, the recipient and any tax treaty: check HMRC’s guidance or ask an accountant.
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