If you are a CIS contractor, you must file a monthly return with HMRC. A CIS contractor pays subcontractors for construction work. The return tells HMRC who you paid. It tells them how much you paid. It tells them what you deducted. If you miss it, the penalties start right away.
Who needs to file a CIS monthly return?
CIS monthly returns are the contractor’s obligation. They are not the subcontractor’s obligation. If you pay subcontractors for construction work under CIS, you must file a return every month. You must file even if you made no payments that month.
Contractor under CIS means any business that pays others to do construction work. This includes main contractors and property developers. It also includes some housing associations and local authorities. Once you register as a CIS contractor with HMRC, the return-filing obligation starts.
Subcontractors receive payments under CIS. They do not file monthly returns. Their annual self-assessment covers their tax position. The monthly return is the contractor’s responsibility.
What is the deadline for CIS monthly returns?
CIS monthly returns are due by the 19th of each month. They cover the tax month ending on the 5th. For example, you must report payments made between 6 March and 5 April by 19 April.
HMRC operates on 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 by paper. Paper returns must reach HMRC by the 19th. But paper filing is not common.
Most contractors file online. They use their HMRC Government Gateway account. This gives an automatic confirmation receipt. File before the 19th. This gives you time for 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, you must include their name and UTR. UTR means Unique Taxpayer Reference. You must include their NIC number if they are a sole trader. You must include the gross payment and the amount deducted. You must also include any materials deduction applied.
Materials deduction: CIS deductions apply only to the labour part of a payment. They do not apply to materials. If a subcontractor invoice includes materials costs, you deduct those costs first. You deduct them from the gross payment. Then you calculate the CIS deduction on what is left.
For example, a subcontractor invoices £5,000. That is £3,000 labour and £2,000 materials. The 20% CIS deduction applies to £3,000 only. That is £600. The contractor passes £4,400 to the subcontractor.
The return must also show the subcontractor’s verification number. HMRC gives this reference when you verify a subcontractor. You must verify 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 showing no payments made. You must file it even if you made no CIS payments that month. Not filing a nil return carries the same penalties. The penalties are the same as not filing a return with payment data.
From 6 April 2026, HMRC tightened nil return compliance. Some contractors repeatedly fail to file nil returns. They face escalating penalties. The penalties are the same as for missed payment returns. You must file nil returns by the same 19th of the month deadline.
You may be registered as a CIS contractor but have no active subcontractors. You still file nil returns. You keep filing until you deregister. Or you keep filing until activity resumes.
What are the penalties for missing a CIS monthly return?
Penalties start automatically on the day after the deadline. The longer you are late, the more you pay. Penalties run per return and per month late.
The penalty structure:
- Up to 1 month late: £100
- 2 to 12 months late: additional £200 per month (up to £2,400 cumulative)
- More than 12 months late: additional penalty of the higher of 5% of the tax deducted on the return, or £300
If you have multiple returns outstanding, penalties run on each one independently. Three months of missed returns can result in over £900 in penalties alone.
HMRC can reduce or waive penalties in some cases. This applies to genuine illness or unavoidable disruption. You must file a formal appeal. Penalties for late filing of CIS returns are separate. They are separate from any late payment penalties on the tax owed.
What about the Construction Industry Scheme registration?
Before you can file returns, you must register as a CIS contractor. Registration requires a UTR number. You do it online through HMRC Government Gateway. Once registered, the monthly return obligation begins.
What if a subcontractor isn’t registered with HMRC?
Some subcontractors have not registered with HMRC under CIS. For them, the deduction rate is 30%. The normal rate is 20%. You must verify each new subcontractor before paying them for the first time. HMRC’s CIS verification service confirms their registration status. It also confirms the rate. You can use the service online or by phone.
Always verify before paying. An incorrect deduction rate is a contractor’s liability. This is true even if the rate is lower than it should be. It is not HMRC’s liability.
Does umbrella PAYE replace the need for CIS returns?
No. CIS monthly returns are a contractor obligation. You may be a construction contractor who uses an umbrella company for your own employment. That does not change your contractor obligations. You still 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 are about the payments you make to others.
Some sole traders and small limited companies move all their own work to umbrella PAYE. They stop operating as CIS contractors entirely. That is a choice to exit the CIS contractor role. It means no more subcontractors. It means no more monthly returns.
Contact the CIS payroll service if you need help managing CIS returns or verifying subcontractors.
Frequently Asked Questions
Who has to file a CIS monthly return?
CIS contractors, any business that pays subcontractors for construction work, must file a monthly return with HMRC. Subcontractors do not file returns. Their tax is handled through self-assessment. The obligation starts from registration as a CIS contractor.
What is the deadline for a CIS monthly return?
Returns are due by the 19th of each month, covering the tax month ending on the 5th. For example, payments made between 6 March and 5 April must be reported by 19 April.
What is a CIS nil return?
A nil return is filed when no CIS payments were made in the tax month. It’s still required. Missing a nil return carries the same penalties as missing a payment return. From April 2026, HMRC applies these penalties more strictly.
What are the penalties for a late CIS monthly return?
Up to 1 month late: £100. 2 to 12 months late: additional £200 per month. Over 12 months: the higher of 5% of tax deducted or £300. Penalties apply per return, so multiple outstanding returns accumulate quickly.
What deduction rate applies if a subcontractor isn’t registered with HMRC?
The 30% unregistered rate applies. Contractors must verify every new subcontractor before paying them for the first time. HMRC’s verification service confirms registration status and the applicable rate.
