CIS returns UK — get every payment, deduction and deadline connected.
Paying subcontractors is more than making a deduction. Britvex helps contractors connect CIS registration, HMRC verification, correct deduction rates, monthly returns, subcontractor statements and PAYE records to the actual construction payments made.
One complete audit trail
From subcontractor identity to the HMRC return.
CIS begins by identifying who is the contractor—and what work is within scope.
The scheme can apply to businesses that engage subcontractors for construction operations. A company does not escape CIS merely by describing itself as a project manager or using subcontractors who invoice through a limited company.
Mainstream contractors
Businesses engaging subcontractors to carry out construction operations normally register and operate CIS where the rules apply, including builders, developers and contractors commissioning relevant works.
Non-construction organisations
A business whose main trade is not construction can still become a deemed contractor if its construction expenditure crosses the statutory threshold—currently more than £3 million in a rolling 12-month period, subject to detailed rules.
Identify construction operations
Building, alteration, repairs, site preparation and certain associated work may fall within CIS; the definition has exclusions. Mixed contracts need review rather than assuming every invoice line is construction labour.
Employees are not CIS subcontractors
A true employee is normally treated through PAYE, not CIS. Contractors should consider employment status before the monthly declaration and retain the evidence behind the decision.
Register → verify → deduct → report.
A repeatable monthly process helps avoid missing payments, wrong rates or late returns. It must reconcile with the accounting records rather than being reconstructed only at the deadline.
Set up the correct HMRC records.
Confirm contractor registration, employer PAYE references, who is legally paying subcontractors and whether activity is within construction operations. Agree the scope of any payroll or CIS support.
Confirm the subcontractor’s HMRC status.
Obtain the correct name, business type and UTR and verify with HMRC where required. Record the verification result and apply the actual status returned—0%, 20% or 30%.
Separate materials, VAT and exclusions.
Review invoices and supporting materials costs, VAT treatment and construction scope before calculating a deduction. Check whether the domestic reverse charge also affects VAT presentation.
Record the correct gross-to-net payment.
Show gross payment, allowable materials, CIS deduction, net subcontractor payment and any separate VAT amount. Reconcile payments to bank and supplier ledger.
Complete the monthly return by the 19th.
Report the tax month 6th–5th, including subcontractor payments and deductions. Submit a nil return or inactivity notification when required; retain filing acknowledgements.
Pay HMRC and issue statements.
Reconcile CIS deductions with PAYE liabilities and payment dates, give deduction statements and keep copies of the returns, verifications and correspondence.
The rate comes from HMRC; the calculation comes from the invoice evidence.
Deduct only on the amount to which CIS applies after permitted adjustments. The following is an illustration, not a substitute for invoice-level calculation.
Where HMRC confirms gross payment status, the contractor normally pays the eligible subcontractor gross without CIS deduction; reporting duties can still remain.
Standard rate where the subcontractor is registered and HMRC verification supports the status. The contractor must still calculate the deduction base correctly.
Higher rate where HMRC verification indicates it is required, often because the subcontractor is not registered or cannot be verified against the supplied details.
A subcontractor invoices £2,800 excluding VAT, including £600 of qualifying direct materials. With a 20% CIS rate, the illustrative deduction is 20% × £2,200 = £440; net labour-and-materials payment before any separate VAT treatment is £2,360.
CIS, domestic reverse-charge VAT and PAYE are three different systems.
A single construction invoice may trigger questions under more than one tax regime. Good records keep the VAT liability, CIS deduction and bank payment separated, with payroll/payment information reconciled.
CIS deduction base
Under HMRC’s detailed rules, the deduction base excludes VAT charged by a VAT-registered subcontractor and can be reduced by allowable direct materials and qualifying consumables paid for by the subcontractor. Do not deduct CIS from every gross invoice total without checking the breakdown.
Domestic reverse charge for construction VAT
Where the domestic reverse charge applies, the customer rather than the supplier accounts for the VAT. It has its own conditions and exemptions, including relevant end-user situations. A reverse-charge invoice does not remove the need to apply CIS separately when the scheme applies.
Payroll and employer payment references
CIS tax deductions normally move through the contractor’s PAYE payment system. Returns and HMRC remittances have different deadlines: the monthly CIS return is due by the 19th, while deductions are generally payable by the 19th or by the 22nd electronically, subject to bank-day adjustments.
Limited-company subcontractors and offsets
Where a limited-company subcontractor suffers CIS deductions, it can ordinarily claim eligible offsets against its own PAYE and National Insurance through the applicable employer process, with remaining balances handled under HMRC rules. Sole traders generally reconcile CIS suffered through Self Assessment instead.
The 6th–5th tax month drives a timetable that is easy to confuse.
Use the actual HMRC CIS tax month rather than the calendar month used in management accounts. Note that a nil month still requires an appropriate action under the reinstated 2026 rules.
A tax month begins on the 6th and ends on the 5th of the following calendar month. File payments according to the actual date paid rather than solely the invoice date.
Submit the return by the 19th following that tax month. Payments between 6 May and 5 June belong on the return due by 19 June.
Deducted CIS tax is generally payable by the 19th, or the 22nd if paid electronically, following the tax month. Bank holiday arrangements and quarterly-payment eligibility may affect the remittance date.
Where deductions were made, provide the payment and deduction statement within 14 days after the tax month ends, ordinarily by the 19th.
From 6 April 2026, mainstream contractors must file a nil return or notify HMRC of inactivity if no subcontractors were paid. Do not infer from the absence of payments that no compliance action is necessary.
An initial £100 penalty can arise for a late return. Further penalties are generally £200 after two months, followed by additional amounts after six and twelve months, with more serious penalties possible in specified cases.
A CIS file should explain the return from start to finish.
If the month is already over, Britvex can still assess whether the records are complete. However, missing invoices or unverified subcontractors must be resolved, not guessed.
CIS registration, employer PAYE reference and the entity making payment.
Correct legal names, trading names, UTRs and company details.
Verification numbers or status responses and their dates.
Construction services, labour, materials, VAT status and invoice dates.
Dates paid, bank evidence and gross/net reconciliation.
Applied 0%, 20% or 30% rate and calculation working.
Monthly returns, amendments, acknowledgements and inactivity notices.
Copies of subcontractor statements and PAYE/CIS remittance records.
CIS deductions are advance tax payments, not necessarily the final tax bill.
The contractor’s return is only one side of the process. Subcontractors should also reconcile every payment statement to income, tax records and their own reporting position.
Sole traders and partnerships
A subcontractor who operates as a sole trader generally reports relevant trading income and CIS deductions suffered on the appropriate Self Assessment return. Keep the contractor’s statements alongside sales and expense records and do not confuse a CIS deduction with VAT withheld.
Limited-company subcontractors
A limited company often has employer payroll, Corporation Tax and annual accounts as well as CIS suffered. The company needs to reconcile the deductions through the correct employer and Corporation Tax processes, avoiding misclassification as ordinary customer discounts.
Gross payment status
A qualifying business may seek gross payment status, but the statutory tests and continuing obligations matter. Failure to remain compliant can put that status at risk. Contractors should not accept a verbal claim of gross status without the applicable HMRC verification result.
Corrections and disagreements
Where a monthly return omits a payment or uses an incorrect figure, correct the relevant filed return through HMRC’s permitted route. If an incorrect rate was applied, preserve the original verification result and investigate what was known at the payment date.
Keep CIS supported by bookkeeping, tax and payroll.
The existing Contractors & CIS industry page covers wider construction finance. This page focuses on the monthly statutory process.
Clear scope. Professional records. Connected support.
Britvex works within a defined engagement and its current regulatory position. We distinguish financial information, specialist tax review and decisions that require external legal or regulated professional advice.
Check the source, not just the summary.
The position can depend on the relevant tax year, accounting period, facts and later legislation. These official sources underpin the general explanations above.
- HMRC CIS 340 guide (updated August 2026) — HMRC / GOV.UK
- File CIS monthly returns — HMRC / GOV.UK
- Make deductions and payments — HMRC / GOV.UK
- Subcontractor deduction rates — HMRC / GOV.UK
Material is general information and not a substitute for advice on your own circumstances. Regulatory material last reviewed 29 October 2026.
Questions worth answering before you act.
These practical answers explain general UK rules and what information is needed for a proper review. Specific legal and tax outcomes depend on the period, facts and current HMRC guidance.
What is a CIS monthly return?
A contractor reports payments made to subcontractors for relevant construction work in each tax month, including gross amounts, materials and deductions. A CIS tax month runs from the sixth of one month to the fifth of the next.
When is a CIS return due?
A contractor must send the monthly return to HMRC by the 19th of the month following the end of the tax month. For example, payments from 6 May to 5 June are reported by 19 June.
What are the CIS deduction rates?
HMRC verification normally produces a rate of 20% for a registered subcontractor, 30% if the subcontractor cannot be verified or is unregistered, or 0% where the subcontractor has gross payment status.
Do I need to file a nil CIS return if I paid no subcontractors?
From 6 April 2026, mainstream contractors must submit a nil return or tell HMRC they are inactive when they have made no subcontractor payments. Do not assume that silence is sufficient.
Are CIS deductions calculated on the VAT-inclusive invoice?
Generally no. VAT charged by a VAT-registered subcontractor is excluded before applying the CIS calculation. Qualifying direct materials costs also affect the deduction base; the invoice must be reviewed rather than applying 20% to every line.
Is CIS the same thing as VAT reverse charge?
No. CIS governs deductions and reporting for relevant construction payments, while the domestic reverse charge is a separate VAT mechanism that may apply to certain construction services. Both must be considered where relevant.
Can a subcontractor use gross payment status?
Eligible subcontractors may apply to HMRC for gross payment status if the statutory business, turnover and compliance conditions are met. The contractor must use the deduction rate HMRC returns on verification.
Do I verify a subcontractor every month?
Verification is needed when the rules require it, including where the subcontractor is new or the relevant previous-payment history means fresh verification is needed. It is not normally a universal monthly exercise for every continuously paid subcontractor.
When must I pay CIS deductions to HMRC?
The ordinary monthly deadline is the 19th after the tax month, or the 22nd for electronic payment, subject to bank holidays and special arrangements. The return filing deadline remains the 19th.
What if I file a CIS return late?
HMRC generally charges an initial £100 penalty for a late monthly return, with further penalties if the return remains outstanding. More serious omissions and incorrect status declarations can also lead to penalties.
Do I need to give subcontractors a deduction statement?
Yes. Where tax has been deducted, contractors must provide the required written payment and deduction statement within 14 days after the tax month ends—normally by the 19th.
Can a limited-company subcontractor recover CIS deductions?
A company may offset qualifying CIS deductions suffered against relevant PAYE and National Insurance liabilities by the prescribed employer process; any remaining balance is dealt with under HMRC rules. This is different from a sole trader claiming through Self Assessment.
Does CIS automatically mean a subcontractor is self-employed?
No. A contractor must consider genuine employment status before treating a payment as one made to a subcontractor under CIS. Misclassification can create PAYE and other consequences.
What information does Britvex need for CIS returns?
Typically your contractor registration and PAYE details, subcontractor names and UTRs, HMRC verification results, invoices, payment dates, materials breakdown, VAT position, deduction statements and prior returns.
Bring the facts. We’ll define the next professional step.
Contact Britvex about monthly CIS compliance. We confirm the work required, the records to supply and the agreed scope before undertaking client services. We do not guarantee a tax result, authority decision or filing outcome.
United Kingdom · International clients
+44 20 3758 7500info@britvex.co.ukbritvex.co.uk · britvex.com