What is the Construction Industry Scheme (CIS)?
Under the Construction Industry Scheme (CIS), contractors deduct money from subcontractor payments and pass it to HMRC. These deductions are treated as advance payments towards the subcontractor’s tax and National Insurance.
If your Dext account is integrated with Xero, Sage 50, or QuickBooks Online, you can apply:
CIS category codes
This ensures the correct tax treatment is applied when publishing records.
Before you begin
Make sure CIS is enabled in your accounting software:
CIS must be active in your integration before publishing CIS-related records from Dext.
How to apply CIS category codes in Dext
To ensure CIS information is published correctly to your accounting software:
Make sure the supplier name in Dext exactly matches the CIS contact name in your integrated software.
Open the item and select the correct CIS category from the Category dropdown
Review the tax rate and details.
Click Publish.
Once published, the record in your accounting software will include the relevant CIS information.
Important: If you are using QuickBooks Online, you must manually adjust the Less CIS field after publishing.
How to automate CIS categorisation with AI Assist
You can use Dext AI Assist to automatically extract and categorise labour and materials line items on CIS invoices - removing the need to split and categorise them manually each time.
AI Assist works by applying guidance rules you write. When a CIS invoice is uploaded to the Costs workspace, Dext reads your guidance and creates the correct line items automatically.
Set up a CIS guidance rule
To set up a CIS guidance rule, go to AI Assist in your account and create a new Account guidance rule. If you manage multiple clients with CIS subcontractors, use Shared guidance to apply the rule across all relevant accounts at once.
Write your guidance to instruct Dext to:
Create line items when an invoice refers to CIS
Group labour lines and allocate them to CIS - Labour Expense - record these as the gross amount, without deducting CIS from the labour line items
Group material lines and allocate them to Materials Purchased
Ignore the CIS deduction line - do not extract it as a separate line item
Note: Here's an example guidance description you can adapt for your account:
If an invoice is uploaded into the Costs workspace that refers to CIS, create line items. Group and allocate all labour lines to CIS - Labour Expense. Ensure labour is recorded as the gross amount - do not deduct CIS from the labour line items. Group and allocate all material lines to Materials Purchased. Do not extract the CIS deduction as a line item.
Important: The category codes in your guidance should match the nominal codes in your Xero account. These vary between accounts, so confirm the correct codes with your accounting software setup before saving the rule. AI Assist applies guidance to new items only. Existing inbox items won't be updated automatically.
What Dext extracts
When AI Assist processes a CIS invoice, it groups the invoice lines into 2 categorised line items: one for labour and one for materials. The gross amounts are used - the CIS deduction shown on the invoice is not extracted as a line item, because it's handled automatically by your accounting software when you publish.
You can review what was extracted by opening the item and selecting Edit line items.
How to split labour and materials for CIS
If an invoice or receipt includes both labour and materials, you need to split the lines correctly to ensure accurate CIS deductions.
Use Line Items to:
Allocate labour to CIS - Labour Expense
Allocate materials to Materials Purchased
This ensures the correct deduction is automatically set up in your accounting software.
To automate this process further, you can use:
How to enable Domestic Reverse Charge (DRC)
If applicable to your business, you can also enable Domestic Reverse Charge (DRC) tax rates in your Dext account to ensure VAT is handled correctly for CIS-related transactions.
Make sure DRC is also set up correctly in your accounting software.
Key tips for working with CIS in Dext
Always match supplier names exactly between Dext and your accounting software.
Confirm CIS is enabled in your integration before publishing.
Split labour and materials correctly to ensure accurate deductions.
Review published entries in QuickBooks Online to adjust the Less CIS field if required.