If you are a CIS contractor, you must submit a monthly return to HMRC for each tax month, even if you made no payments to subcontractors. The return tells HMRC about payments to subcontractors and the CIS deductions you have made.

Failing to submit returns on time results in automatic penalties that escalate the longer you delay. This guide explains when and how to submit your returns, how to handle nil returns, and what happens if you miss the deadline.

Who must submit CIS monthly returns

You must submit monthly returns if you are:

A mainstream contractor - a construction business paying subcontractors for construction work
A deemed contractor - a non-construction business spending over 3 million pounds on construction in any rolling 12-month period

If you only use subcontractors occasionally, you still need to submit returns for every tax month - including nil returns when you made no payments.

Key deadlines

CIS operates on a monthly cycle. Each tax month runs from the 6th of one month to the 5th of the following month (for example, 6 May to 5 June).

CIS payment and return deadlines

Monthly return filing deadlines and payment due dates for the Construction Industry Scheme. Tier 1 atomic data.

Tax month definition: 6th of one month to 5th of the following month
Monthly return deadline: 19th of the month following the tax month
Electronic payment deadline: 22nd of the month following the tax month
Postal payment deadline: 19th of the month following the tax month
Payment and deduction statement (PDS) deadline: Within 14 days of end of each tax month

CIS returns cover a tax month which runs from the 6th of one month to the 5th of the next. For example, the return for 6 May to 5 June must be filed by 19 June. If paying CIS deductions electronically (including by Direct Debit, Bacs, or CHAPS), the deadline is the 22nd. If paying by post, the deadline is the 19th. You must give subcontractors a payment and deduction statement within 14 days of the end of each tax month.

File your CIS monthly returns

Example: For payments made between 6 May and 5 June, your return must be filed by 19 June. If paying electronically, you have until 22 June to pay the deductions to HMRC.

Filing your CIS monthly return

The monthly return (CIS300) reports all payments made to subcontractors during the tax month. HMRC uses this information to track CIS deductions and ensure subcontractors can offset them against their tax liability.

CIS monthly return submission process (CIS300)

Step-by-step process for submitting CIS monthly returns to HMRC, including gathering payment information, completing the CIS300, handling nil returns, and paying deductions. Required for all CIS contractors.

CIS contractors must submit a monthly return to HMRC for each tax month, even if no payments were made to subcontractors. Tax months run from the 6th of one month to the 5th of the following month.

Identify the return period – Determine which tax month the return covers. Example: payments made between 6 May and 5 June are reported on the June return. The return is due by 19 June.
Gather payment information for the tax month – Collect records for every payment made to subcontractors during the period. For each subcontractor, you need: name, UTR, gross payment amount, materials cost claimed, CIS deduction made, net payment, and verification reference number.
Log in to HMRC online services – Sign in at gov.uk/use-construction-industry-scheme-online using your Government Gateway credentials. Navigate to 'File a CIS return'.
Complete the CIS300 return – Enter details for each subcontractor paid during the tax month: their UTR, gross amount, deduction amount, and materials cost. Declare that the individuals listed are subcontractors, not employees. Commercial software users: do not enter negative values - use 0 instead.
Submit by the 19th of the following month – File the return by 19th of the month after the tax month ends. Example: for the tax month 6 May to 5 June, submit by 19 June. Late returns incur automatic penalties.
Pay CIS deductions to HMRC – Pay the total CIS deductions by 22nd (electronic payment) or 19th (postal payment) of the following month. CIS payments are combined with PAYE/NI if you also have employees on payroll.
Issue Payment and Deduction Statements to subcontractors – Give each subcontractor a written statement within 14 days of the end of the tax month showing: your name and PAYE reference, their name and UTR, the tax month, gross payment, materials cost, and amount deducted.

Nil returns - no payments made

If you made no payments to subcontractors during a tax month, you must still tell HMRC. You can:

Submit a nil return - file the CIS300 showing no payments (still due by 19th)
Request an inactivity period - tell HMRC you expect no payments for up to 6 months. Use the CIS online service to request this. HMRC will not expect returns during the inactivity period, but you must inform them immediately if you restart making payments.

Failing to submit nil returns or notify HMRC of inactivity will trigger late filing penalties.

Amending a submitted return

If you discover an error after submitting a CIS return, you can amend it:

Online amendments - use the CIS online service to correct errors in returns for the current and previous tax year
Earlier tax years - contact HMRC's CIS helpline to amend returns from more than one tax year ago
Underpaid deductions - pay the additional amount to HMRC as soon as possible to avoid interest
Overpaid deductions - HMRC will credit your account; this reduces future payments due

Keep records of all amendments made and the reasons for them.

Return filing deadline: 19th of month following the tax month
Electronic payment deadline: 22nd of month following the tax month
Postal payment deadline: 19th of month following the tax month
Payment and Deduction Statement deadline: Within 14 days of end of tax month

File your CIS monthly returns

Calculating CIS deductions

Before you can complete your return accurately, you need to calculate the correct CIS deduction for each payment. The deduction rate depends on whether the subcontractor is registered with CIS and whether they have gross payment status.

The key principle is that CIS deductions apply only to the labour element of the payment - you must exclude VAT and materials costs before applying the deduction rate.

CIS deduction calculation process

Step-by-step process for calculating Construction Industry Scheme (CIS) deductions from subcontractor payments. This procedure is used identically across multiple guides covering CIS contractor obligations, subcontractor payments, and construction payroll. Includes worked example.

Contractors must calculate CIS deductions from every payment to subcontractors for construction work. The deduction is calculated on the labour element only, after excluding VAT and materials. The deduction rate depends on the subcontractor's CIS registration status.

You must verify each subcontractor with HMRC before their first payment to determine the correct deduction rate (0%, 20%, or 30%).

Step 1: Identify the gross payment amount – Start with the total invoice amount from the subcontractor. This is the gross amount before any deductions.
Step 2: Exclude VAT from the calculation – CIS deductions are calculated on the VAT-exclusive amount. Remove any VAT charged before proceeding with the calculation.
Step 3: Exclude materials cost (with evidence) – Deduct the cost of materials the subcontractor has paid for directly. You must obtain evidence of materials costs where possible.
Step 4: Apply the correct deduction rate – Multiply the labour element (after deducting VAT and materials) by the deduction rate confirmed when you verified the subcontractor.
Step 5: Calculate net payment to subcontractor – Calculate the amount to pay the subcontractor after deducting the CIS amount. Add back VAT if applicable.
Step 6: Record the deduction for monthly return – Keep accurate records of all CIS deductions for your monthly return to HMRC and for issuing payment and deduction statements.

CIS deduction formula

CIS deduction = (Invoice - VAT - Materials) x Deduction rate

Worked example

A registered subcontractor (20% rate) submits an invoice for plastering work:

Invoice total (excl VAT): 1,000
VAT at 20%: 200
Materials cost (with receipts): 200
Subcontractor status: Registered (20% deduction rate)

Step-by-step calculation

Gross amount (excl VAT): 1,000
Deduct materials: 1,000 - 200 = 800 (labour element)
Apply CIS rate (20%): 800 x 0.20 = 160
CIS deduction to pay HMRC: 160

Labour element: 800
CIS deduction (20%): 160
Net labour payment: 640
Materials (passed through): 200
VAT (passed through): 200
Total to subcontractor: 1,040
CIS to pay HMRC: 160
Total contractor outlay: 1,200

Key points

The subcontractor receives 1,040 (net labour 640 + materials 200 + VAT 200)
The contractor pays 160 to HMRC as CIS deduction
Total contractor outlay is 1,200 (1,040 to subcontractor + 160 to HMRC)
The subcontractor can offset the 160 CIS deduction against their tax liability

Related snippets

For deduction rates and materials rules, see:

cis_deduction_rates - Current deduction rates (0%, 20%, 30%)
cis_materials_treatment - What counts as materials and evidence requirements

CIS contractor - make deductions and pay subcontractors

Use the CIS online service

Nil returns - when you have not paid subcontractors

If you made no payments to subcontractors during a tax month, you must still inform HMRC. You have two options:

Option 1: Submit a nil return

File a CIS300 showing no payments. This is due by the 19th of the following month, just like a normal return. Use the CIS online service to submit a nil return.

Option 2: Request an inactivity period

If you expect no payments to subcontractors for an extended period, you can request inactivity for up to 6 months at a time. During this period, HMRC will not expect returns from you.

Important: If you make any payment to a subcontractor during an inactivity period, you must immediately notify HMRC and submit a return for that tax month. Failing to do so triggers late filing penalties.

Consequences of not filing nil returns

If you do not file a return and have not requested inactivity, HMRC will assume you have made payments and failed to report them. This triggers:

Automatic late filing penalties (starting at 100 pounds)
Potential compliance enquiries
Risk to your contractor registration if persistent

Late filing penalties

HMRC charges automatic penalties for late CIS returns. Penalties apply separately to each return that is late, so missing multiple deadlines results in multiple penalties.

CIS late filing and payment penalties

Penalty structure for late or incorrect Construction Industry Scheme (CIS) monthly returns, including escalating late filing penalties and maximum liability.

HMRC charges penalties for late CIS monthly returns. Penalties escalate the longer the return is overdue, with additional percentage-based penalties applied at 6 and 12 months.

Late filing (1 day late): £100 fixed penalty
Late filing (2 months late): Additional £200 (total £300)
Late filing (6 months late): Additional £300 or 5% of CIS deducted, whichever is higher
Late filing (12 months late): Additional £300 or 5% of CIS deducted, whichever is higher
Maximum penalty (over 12 months): Up to £3,000 or 100% of CIS deducted, whichever is higher
Late payment: Interest plus PAYE late payment penalty regime applies
Incorrect employment status: Up to £3,000 for declaring someone as subcontractor when they should be employee
Failure to produce records: Up to £3,000 for not showing CIS records when requested by HMRC

Pay a CIS late filing penalty

Appealing a penalty

You can appeal a CIS late filing penalty if you have a reasonable excuse, such as:

Serious illness or hospitalisation preventing you from filing
Bereavement of a close family member
Fire, flood, or other disaster affecting your records
HMRC system failures (if documented)

You must appeal within 30 days of receiving the penalty notice. Common excuses that are not accepted include: relying on someone else to file for you, being too busy, or not knowing about the deadline.

Paying CIS deductions to HMRC

After submitting your return, you must pay the total CIS deductions to HMRC. If you also run a PAYE payroll, CIS deductions are usually paid together with your PAYE and National Insurance liabilities.

Payment deadlines

Electronic payment (Bacs, CHAPS, online banking, Direct Debit): 22nd of the month following the tax month
Postal payment (cheque): 19th of the month following the tax month

If the deadline falls on a weekend or bank holiday, payment must reach HMRC on the last working day before.

Payment reference

Use your 13-character Accounts Office reference followed by the tax year and month number. Getting the reference wrong can delay allocation to your account and may result in late payment notices.

Record keeping requirements

You must keep records of all CIS transactions for at least 3 years after the end of the tax year they relate to. Records should include:

Subcontractor details (name, UTR, verification number)
Gross payment amounts and materials costs claimed
CIS deductions made
Payment and deduction statements issued
Verification responses from HMRC

HMRC can request these records during a compliance check. Failure to produce records when requested can result in a penalty of up to 3,000 pounds.

Amending a submitted return

If you discover an error after submitting a CIS return, you can amend it:

Current and previous tax year: Use the CIS online service to amend returns
Earlier tax years: Contact HMRC's CIS helpline

If you have underpaid deductions, pay the additional amount as soon as possible to minimise interest. If you have overpaid, HMRC will credit your account and reduce future payments due.

Gather payment records for the tax month

Collect records for every payment made to subcontractors during the period. You need each subcontractor's name, UTR, gross payment, materials cost, CIS deduction, and verification number.
Calculate CIS deductions correctly

For each payment, exclude VAT and materials cost, then apply the correct deduction rate (0%, 20%, or 30%) based on the subcontractor's registration status.
Sign in to HMRC online services

Access the CIS online service at gov.uk/use-construction-industry-scheme-online. You will need your Government Gateway credentials.
Complete and submit the CIS300 return

Enter details for each subcontractor paid during the tax month. Submit by the 19th of the following month to avoid penalties.
Pay CIS deductions to HMRC

Pay total deductions by the 22nd (electronic) or 19th (postal) of the following month. Use your Accounts Office reference with the correct period.
Issue payment and deduction statements

Give each subcontractor a written statement within 14 days of the end of the tax month showing gross payment, materials, and deduction amounts.

CONSTRUCTION & PROPERTY Requirement

Before paying any subcontractor for the first time, you must verify them with HMRC using the CIS online service. Verification tells you whether to deduct 0%, 20%, or 30% from their payments.

If you cannot verify a subcontractor (details do not match HMRC records), you must apply the 30% deduction rate until the issue is resolved.

Re-verification is required if a subcontractor has not been included on any of your returns in the current or previous 2 tax years.

Use the CIS online service

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Submit your CIS monthly return

Who must submit CIS monthly returns

Key deadlines

Filing your CIS monthly return

Calculating CIS deductions

Nil returns - when you have not paid subcontractors

Option 1: Submit a nil return

Option 2: Request an inactivity period

Consequences of not filing nil returns

Late filing penalties

Appealing a penalty

Paying CIS deductions to HMRC

Payment deadlines

Payment reference

Record keeping requirements

Amending a submitted return

Gather payment records for the tax month

Calculate CIS deductions correctly

Sign in to HMRC online services

Complete and submit the CIS300 return

Pay CIS deductions to HMRC

Issue payment and deduction statements

Verification before first payment

Compliance Assistant

🧪 Business Context Testing

◉ Content Graph

Who must submit CIS monthly returns

Key deadlines

Filing your CIS monthly return

Calculating CIS deductions

Nil returns - when you have not paid subcontractors

Option 1: Submit a nil return

Option 2: Request an inactivity period

Consequences of not filing nil returns

Late filing penalties

Appealing a penalty

Paying CIS deductions to HMRC

Payment deadlines

Payment reference

Record keeping requirements

Amending a submitted return

Gather payment records for the tax month

Calculate CIS deductions correctly

Sign in to HMRC online services

Complete and submit the CIS300 return

Pay CIS deductions to HMRC

Issue payment and deduction statements

Verification before first payment

Related guides in Business Tax Overview

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