If you’re a CIS contractor, meaning you pay subcontractors for construction work, you must file a monthly return with HMRC. It tells HMRC who you paid, how much, and what you deducted. Miss the deadline, and penalties start straight away. This guide covers the basics.
Who needs to file a CIS monthly return?
CIS monthly returns are the contractor’s job, not the subcontractor’s. If you pay subcontractors for construction work under CIS, you must file a return every month. If you made no payments, file a nil return or tell HMRC in advance.
“Contractor” under CIS means any business that pays other people to do construction work. That includes main contractors, property developers, and some housing associations and local authorities. If you’ve registered as a CIS contractor with HMRC, the filing duty applies to you.
Subcontractors who get paid under CIS do not file monthly returns. Their annual self-assessment covers their tax position. The monthly return stays with the contractor.
What is the deadline for CIS monthly returns?
CIS monthly returns are due by the 19th of each month for the tax month ending on the 5th. For example, the return for payments made between 6 March and 5 April is due by 19 April.
HMRC runs tax months from the 6th to the 5th. The return covers all CIS payments made in that tax month. The 19th deadline applies whether you file online or on paper. Paper returns must still reach HMRC by the 19th, although paper filing is rare.
Most contractors file online through their HMRC Government Gateway account. It gives an automatic confirmation receipt. File before the 19th so you have time to deal with any system issues.
What does a CIS monthly return include?
The return must list every subcontractor you paid during the tax month. For each one, include their name, UTR (Unique Taxpayer Reference), NIC number (if they are a sole trader), the gross payment, the amount deducted, and any materials deduction applied.
Materials deduction means CIS deductions apply only to the labour part of a payment, not to materials. If a subcontractor invoice includes materials costs, the contractor deducts that cost from the gross payment before working out the CIS deduction.
For example, a subcontractor invoices £5,000: £3,000 labour and £2,000 materials. The 20% CIS deduction applies only to the £3,000 labour figure, so the deduction is £600. The contractor pays £4,400 to the subcontractor.
The return must also show the subcontractor’s verification number. HMRC gives this reference when you verify a subcontractor before paying them for the first time.
Use the CIS deduction calculator to check deduction amounts before filing.
What is a CIS nil return?
A nil return is a monthly return that shows no payments were made. You must file it for a month with no CIS payments, unless you told HMRC in advance. Missing a nil return brings the same penalties as missing a return with payment data.
From 6 April 2026, you need to file it unless you told HMRC at least 14 days before that month. Contractors who repeatedly miss nil returns face the same rising penalties as they would for missed payment returns. Nil returns must be filed by the same 19th of the month deadline.
If you have no active subcontractors for a period, you can tell HMRC you have temporarily stopped using them. This is called an inactivity request. Otherwise you still file nil returns.
What are the penalties for missing a CIS monthly return?
Penalties start automatically the day after the deadline. The later you file, the more you pay. Penalties apply to each return and rise at 2, 6 and 12 months.
The penalty structure:
– 1 day late: £100
– 2 months late: a further £200
– 6 months late: a further £300 or 5% of the CIS deductions on the return, whichever is higher
– 12 months late: another £300 or 5%, whichever is higher, or more if information was deliberately withheld
If you have multiple returns outstanding, penalties apply to each one separately. One return left 12 months late costs at least £900.
HMRC can reduce or cancel penalties in genuine cases of illness or unavoidable disruption. You need to appeal formally. Late filing penalties for CIS returns are separate from any late payment penalties on the tax owed.
What about Construction Industry Scheme registration?
Before you can file returns, you must be registered as a CIS contractor. Registration requires a UTR number and is done online through HMRC Government Gateway. Once you’re registered, the monthly return duty begins.
What if a subcontractor isn’t registered with HMRC?
If a subcontractor has not registered with HMRC under CIS, the deduction rate is 30% instead of 20%. You must verify each new subcontractor before paying them for the first time. HMRC’s CIS verification service, online or by phone, confirms their registration status and rate.
Always verify before paying. If you use the wrong deduction rate, even if it is too low, the contractor is responsible, not HMRC.
Does umbrella PAYE replace the need for CIS returns?
No. CIS monthly returns are the contractor’s responsibility. If you’re a construction contractor using an umbrella company for your own employment, that does not change your duty to file CIS returns for the subcontractors you pay.
The two things are separate. Your umbrella handles your PAYE employment as an individual. Your CIS contractor returns cover the payments you make to other people.
Some sole traders and small limited companies move all their own work to umbrella PAYE and stop acting as CIS contractors altogether. That means no more subcontractors and no more monthly returns.
