CIS monthly returns: a step-by-step guide for contractors

What is a CIS monthly return?

If you are a contractor under the Construction Industry Scheme (CIS), you must submit a monthly return to HMRC for every month in which you make payments to subcontractors. The return tells HMRC how much you paid each subcontractor and how much tax you deducted. This is separate from your own Self Assessment return and must be submitted whether or not you owe any tax.

For a recap of how CIS works overall, see our full CIS guide. This article focuses specifically on the monthly return process.

Who must submit a monthly return?

You must submit a CIS monthly return if you are a contractor — meaning you pay subcontractors for construction work. This applies to main contractors, sub-contractors who themselves use sub-sub-contractors, and businesses that spend more than £3 million on construction in a 12-month period (even if construction is not their primary business, such as property developers or housing associations).

If you have no subcontractors in a particular month, you can submit a nil return or contact HMRC to set up an inactivity period (up to 6 months) to avoid having to file each month. Do not simply ignore the return — HMRC will issue a penalty.

When must returns be submitted?

CIS monthly returns must be submitted by the 19th of each month for the previous tax month (which runs from the 6th to the 5th). So the return for the tax month ending 5 April is due by 19 April. The return for the month ending 5 May is due by 19 May, and so on.

Miss this deadline and HMRC will issue an automatic penalty. The penalty structure in 2026:

• Up to 1 month late: £100
• 2 months late: £200
• 6 months late: £300 or 5% of CIS deductions, whichever is higher
• 12 months late: further £300 or 5%, plus potential additional penalties

How to submit a CIS monthly return

You can submit online through your HMRC online services account (the CIS section of the business tax account at gov.uk), or through compatible CIS or payroll software. The return requires:

• The contractor's UTR (Unique Taxpayer Reference)
• For each subcontractor: their name, UTR, National Insurance number (for sole traders), gross payment amount, deductions made, and net payment made
• The deduction rate applied (0%, 20%, or 30% depending on the subcontractor's registration status)

Before making any payment, you must verify each subcontractor with HMRC online or by phone. HMRC will confirm whether the subcontractor is registered and what deduction rate to apply. Keep records of all verifications.

CIS deduction rates explained

There are three rates:

• 0% (gross payment status): The subcontractor has applied for and been granted gross payment status by HMRC. No deductions are made. To qualify, a subcontractor must have a good compliance record and meet turnover thresholds.
• 20% (registered): The subcontractor is registered with HMRC under CIS. HMRC deducts 20% from the labour element of the payment (not materials).
• 30% (unregistered or unverified): Applied when a subcontractor cannot be verified or is not registered with CIS. HMRC deducts 30% — a strong incentive for subcontractors to register.

Materials vs labour in CIS

CIS deductions only apply to the labour element of a payment. If a subcontractor's invoice includes materials, you deduct CIS only from the labour portion. To make this work cleanly, ask subcontractors to break down their invoices into labour and materials. If they do not, HMRC may deem the entire payment as labour. Use the CIS deduction calculator to work out the correct amounts before making payments.

Paying CIS deductions to HMRC

The CIS deductions you collect must be paid to HMRC by the 19th of each month (22nd if paying electronically). These are typically offset against your own PAYE liability. If your CIS deductions exceed your PAYE bill, you can reclaim the excess through your employer payment summary or, for sole traders, through your Self Assessment return. Keep the contractor statement you give to subcontractors — they use it to reclaim their own deductions.