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CIS compliance quick check

Monthly CIS compliance essentials for experienced contractors. Three key actions: verify subcontractors, calculate deductions, submit your return by the 19th.

Construction & Property Running a Business Updated 15 September 2026

3 milestones references 3 guides

Monthly CIS compliance for contractors

Three actions each month keep you compliant. Complete them in order.

Verify subcontractors (before first payment)
Verify subcontractor CIS status

Check registration status with HMRC before paying any new subcontractor. Determines whether you deduct 0%, 20%, or 30%.
Quick reference: deduction rates

The rate HMRC returns during verification determines your deduction.
Registered subcontractor rate

20%

Unregistered subcontractor rate

30%

Gross payment status rate

0% (no deductions)

Effective from

Current tax year 2026/27

Deduction basis

Labour element only (excluding VAT and materials)

When to apply each rate:

20% rate - Subcontractor is registered with HMRC for CIS but does not have gross payment status. This is the standard rate for most registered subcontractors.

30% rate - Subcontractor is not registered with HMRC, or their details cannot be verified. Always verify subcontractors before first payment.

0% rate (gross payment) - Subcontractor has been granted gross payment status by HMRC. They receive full payment and account for tax themselves via Self Assessment or Corporation Tax.

Important: Deductions are calculated on the labour element only. Exclude VAT and any materials the subcontractor has directly paid for.

What is the Construction Industry Scheme (opens in a new tab)

CIS contractor - make deductions and pay subcontractors (opens in a new tab)
Calculate deductions (when paying)
Calculate CIS deductions

Apply the correct rate to the labour element only. Exclude VAT and materials before calculating.
Calculation reminder

Deductions apply to labour only - never to materials or VAT.
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 (opens in a new tab)

Use the CIS online service (opens in a new tab)
Submit monthly return (by the 19th)

Submit CIS monthly return

File your CIS300 by the 19th of the month following each tax month. Pay deductions by the 22nd.

Filing deadlines

Tax months run 6th to 5th. Returns due by 19th; payments by 22nd.

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 (opens in a new tab)

Key deadlines each month

Action Deadline

Tax month ends 5th

Submit CIS return 19th

Pay deductions (electronic) 22nd

Tip: Set calendar reminders for the 15th to start preparing your return.

gov.uk
CIS online service (opens in a new tab)

Verify subcontractors, file returns, and manage your CIS account

gov.uk
File your monthly CIS returns (opens in a new tab)

HMRC guidance stating the 19th-of-the-month deadline and the £100 penalty for filing one day late.

Late filing penalties

Missing the 19th triggers automatic penalties starting at 100 pounds.

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 (opens in a new tab)

Action	Deadline
Tax month ends	5th
Submit CIS return	19th
Pay deductions (electronic)	22nd

CIS compliance quick check

Monthly CIS compliance for contractors

Verify subcontractors (before first payment)

Verify subcontractor CIS status

Calculate deductions (when paying)

Calculate CIS deductions

Submit monthly return (by the 19th)

Submit CIS monthly return

Key deadlines each month

CIS online service (opens in a new tab)

File your monthly CIS returns (opens in a new tab)

Related journeys

Complete your CIS monthly compliance

Getting started with CIS

CIS essentials for small builders

Fix CIS payment errors