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Tax deductions under the construction industry scheme (CIS) apply to the net amount of a payment after deduction of the cost of any materials¹. However, any part of a payment attributable to the subcontractor's travel expenses is subject to tax deduction². This involves a two-part calculation. First, the gross amount of the payment is calculated by excluding VAT and any Construction Industry Training Board (CITB) levy³; this gross amount must be entered on the contractor's monthly return. Secondly, from the gross amount is deducted the net (VAT-exclusive) cost of materials, consumable stores, fuel (except fuel used for travelling), plant hire, and any costs of manufacture incurred in respect of the materials⁴. From 6 April 2021 only materials costs which the subcontractor has purchased directly may be deducted⁵. This means that any materials costs incurred further down the engagement chain (eg if the subcontractor had themselves hired their own subcontractor to purchase their own materials then supply and fit part of the work) must be ignored for