Manage CIS income directly from bank transactions in FreeAgent

If you work with construction clients, you’ll know billing doesn’t always start with a sales invoice. Many subcontractors are paid through self-billing or direct payments, so bank transactions are often the first - and sometimes only - record of their income.

In the past, this meant practices had to manage their clients’ Construction Industry Scheme (CIS) records using bank data, self-billing statements, or payment reports. In FreeAgent, this used to require an invoice-first approach, often leading to manual workarounds to get the records right.

Now, that has changed.

You can record CIS income directly from bank transactions in FreeAgent - no need to create invoices after the fact. It’s a simpler way to keep digital records, especially with MTD changes on the horizon.

A simpler way to manage CIS income

When a CIS payment arrives in the bank feed, you can explain it directly to a CIS income category. FreeAgent will then: 

• treat the transaction as a net receipt
• automatically gross up the labour amount 
• calculate the CIS deduction
• post the correct CIS entries in your clients’ accounts

You still get the same accurate CIS treatment, just through a workflow that better reflects how many subcontractors actually get paid. It also helps you maintain digital records using the bank data your practice already relies on.

Designed for high-volume subcontractor workflows

This update is especially helpful for practices managing CIS clients at scale. Many subcontractors don’t actively use bookkeeping software - they’re not raising invoices or involved in day-to-day admin. Practices often rely on bank data as the main source of truth.

By supporting CIS directly from bank transactions, FreeAgent now fits naturally into these low-touch workflows. It also reduces manual work for practices managing large numbers of subcontractors, including those who may need support meeting future MTD requirements, without taking on more bookkeeping admin themselves.

Accurate, compliant and ready for what’s ahead

Although this workflow starts from the bank transaction rather than an invoice, the accounting outcome stays the same.

FreeAgent handles all the necessary CIS logic, including VAT, the domestic reverse charge, and reporting. This helps you and your subcontractor clients keep records accurate and compliant with less manual input.

With MTD for Income Tax coming into effect from 6th April, having a streamlined workflow is key to handling the transition efficiently. FreeAgent’s automated features, paired with this update, put businesses in a better position for future requirements - especially for clients who want to minimise admin.

If you manage CIS clients, handling their income in FreeAgent just got easier.

Find out more about why practices choose FreeAgent for CIS clients.