by Asim Abbas
11 November 2026 
CIS for contractors: monthly returns, verification and deductions
CIS for contractors: monthly returns, verification and deductions
If you pay subcontractors for construction work, you’re a CIS contractor with monthly obligations to HMRC.
- Verify each subcontractor with HMRC
- Deduct 0%, 20% or 30% from labour
- Monthly return due by the 19th
- Give payment and deduction statements
You must verify subcontractors, deduct the right rate, file monthly returns and give payment statements. Penalties for late returns add up quickly.
This guide explains a contractor’s CIS duties.
Who is a contractor?
- Businesses paying subcontractors for construction work
- Non-construction businesses spending over £3 million on construction in 12 months
Verifying subcontractors
Before paying a new subcontractor, verify them with HMRC. HMRC tells you whether to pay gross, deduct 20% or deduct 30% if unverified or unregistered.
Working out deductions
Deductions apply only to the labour element of invoices. Materials, VAT and certain costs like plant hire are excluded, but materials must be genuine costs to the subcontractor.
CIS tax rebate calculator
Subcontractor deductions.
A builder receives an invoice for £5,000 labour, £2,000 materials and VAT under the reverse charge. The subcontractor is verified at 20%. The builder deducts £1,000 from the labour, pays £6,000, and reports the deduction on the monthly return.
Monthly returns
Returns cover the tax month to the 5th and are due by the 19th. If you haven’t paid any subcontractors, you can tell HMRC to avoid penalties. Deductions are paid with PAYE by the 22nd if paying electronically.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179Late return penalties
| How late | Penalty |
|---|---|
| 1 day | £100 |
| 2 months | £200 |
| 6 months | £300 or 5% of deductions |
| 12 months | £300 or 5%, more if deliberate |
Payment statements
Give each subcontractor a statement within 14 days of the end of the tax month, showing gross payment, materials and deductions.
Employment status
Check subcontractors are genuinely self-employed. HMRC can treat workers as employees, leading to PAYE liabilities.
See HMRC’s guidance on CIS for contractors, our reverse charge guide and our CIS service.
What should I do next?
Before paying.
Not materials or VAT.
Every month.
Frequently Asked Questions
When is the CIS monthly return due?
By the 19th of each month.
What deduction rates apply?
0% for gross status, 20% for registered and 30% for unregistered subcontractors.
Do I deduct CIS from materials?
No, only from labour.
What if I didn’t pay any subcontractors?
Tell HMRC to avoid a late return penalty.
What is the penalty for a late CIS return?
£100 initially, increasing over time.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Ali Imran
I’m Ali Imran, an accountant at Wingate Accountants. I help sole traders, landlords and directors get their returns filed early and accurately, without the last-minute panic.
