Invoice templates for construction services
If you're a contractor, subcontractor or business owner within the construction sector, it's important to understand which type of invoice to issue. There are several rules and schemes in the UK surrounding sales for construction services.
This article explores if you need to register for the Construction Industry Scheme (CIS) or apply the domestic reverse charge to your invoices. We've also provided a sample construction invoice and some free Excel templates for download below.
CIS invoice or standard invoice?
CIS stands for the Construction Industry Scheme which was introduced in the UK to ensure that VAT is being reported correctly in the construction sector. If you're a subcontractor in the UK, it's required that you register for the CIS with HMRC. In addition, if your business hires subcontractors, but not as regular employees, then your business will also have to register for the CIS.
Therefore, if you're registered for the Construction Industry Scheme, you'll need to issue CIS invoices which require different information than standard invoices. On the other hand, if you're a hired employee of a company or are not required to register for the CIS, then you can issue standard invoices.
CIS domestic reverse charge
If you're registered with the CIS, you may need to apply the domestic reverse charge to your invoices. Prior to March 1st 2021, the supplier accounted for the VAT for certain construction services. After March 1st 2021, the domestic reverse charge procedure will be introduced so that the buyer (contractor) will account for the VAT rather than the supplier (subcontractor).
This is only relevant for B2B sales between CIS and VAT-registered businesses. Services provided to end-users do not need to apply the reverse charge.
The domestic reverse charge applies to the majority of construction services covered by the Construction Industry Scheme. This includes construction, repair, demolition, installation, painting, and decorating services. It does not include manufacturing machinery, the work of architects and landscapers, or the installation of advertisements and artworks.
You can find a more detailed list of what's included and excluded from the domestic reverse charge on the UK Government website.
If the sale falls under the domestic reverse charge, you'll need to include a “reverse charge” label on the invoice, and apply the 0% VAT rate.
VAT invoice or non-VAT invoice?
If you're registered with the Construction Industry Scheme, you'll need to issue a CIS invoice (or domestic reverse charge invoice) which is a modified version of a VAT invoice.
If your business is excluded from the Construction Industry Scheme, you may or may not need to issue VAT invoices. If your annual turnover exceeds £85,000, your business will need to register for VAT with HMRC. Once registered, you'll need to issue VAT invoices to your customers and submit recurring VAT Returns to HMRC.
VAT invoices include more information than non-VAT invoices and it's important to include the correct information to avoid mistakes and penalties.
What information needs to be on my invoice?
Invoices require certain information under UK law. Depending on the type of business you run, and if you are registered for the Construction Industry Scheme, you may issue a different type of invoice.
Standard non-VAT invoice
If your business does not hire subcontractors, your turnover is below £85,000, and you're not registered with the CIS, you can issue standard non-VAT invoices. You can find all of the mandatory invoice information in our article: “What information needs to be on an invoice?”.
Standard VAT invoice
If your business is not registered for the CIS, but you are registered for VAT, then you'll need to issue VAT invoices to your customers. This scenario is likely if your construction services are excluded from the CIS and domestic reverse charge procedure (e.g. architect).
VAT invoices require more information than non-VAT invoices, including your VAT registration number and a breakdown of the VAT charged. You can find all of the mandatory VAT invoice information in our article: “What are VAT invoices and who needs to issue them?”.
CIS invoice
CIS invoices include the same information as VAT invoices, but also require a CIS deduction stated on the invoice. The amount is deducted from the subcontractor’s fee and paid to HMRC for tax purposes. You may need to apply the domestic reverse charge to your CIS invoice after March 1st 2021.
The CIS deduction should appear within the breakdown of the price. It will need to state “CIS”, and the rate being deducted, for instance:
“CIS deduction: 20% of £800.00 -160.00”
The CIS amount should then be deducted from the invoice total.
CIS domestic reverse charge invoice
From March 1st 2021, the domestic reverse charge will apply for the majority of construction services. This means that the buyer will account for VAT instead of the supplier.
Domestic reverse charge invoices will include all of the elements on a VAT invoice but also include the 0% VAT rate, and a label stating:
“Domestic reverse charge: Customer to pay the VAT to HMRC. VAT due: £XX.XX.”
You may also need to apply the CIS deduction to the invoice.
Sample invoice for construction services
Below, we've provided an example of a CIS domestic reverse charge invoice. Note that “Reverse charge” is clearly visible on the invoice and the VAT rate is set to 0%. The CIS deduction is also stated in the cost breakdown.
Free Excel & Word invoice templates for construction
If you use Excel or Word to create your invoices, we've provided some free customisable invoice templates for download.
In the Excel file, there are 2 tabs, one for non-VAT invoices, and one for VAT invoices. We've entered formulas to automatically calculate the totals for you. There are also 2 Word files, one for non-VAT businesses and one for VAT businesses.
If you're issuing a CIS invoice or a domestic reverse charge invoice, you'll just need to enter the correct VAT rate and add the reverse charge label or CIS deduction to the invoice. If you wish, you can replace the “SumUp” logo with your own business logo or image.
Invoicing software with templates
Invoicing software can help you create and send professional, legally compliant invoices quickly.
With SumUp Invoices, you can create professional invoices in under 1 minute. Your invoices will include a payment link for your customers to pay quickly with their credit card online.
