CIS monthly returns
If you pay subcontractors for construction work you must file a CIS return by the 19th of every month following the tax month, verify each subcontractor with HMRC before their first payment, and give each one a payment and deduction statement. A month with no subcontractor payments still needs a nil return, or an inactivity request. Filing late costs £100 from day one.
The obligation that catches people is not the deduction — it is the return, due every single month, including the months when you paid nobody at all.
What a contractor has to do
- Register as a contractor before the first payment to a subcontractor.
- Verify each subcontractor with HMRC, which returns the rate to deduct at: 20%, 30%, or 0% for those with gross payment status.
- Deduct at that rate from the labour element only — see what the deduction applies to.
- File the return by the 19th of every month, listing every subcontractor paid.
- Pay the deductions to HMRC, and give each subcontractor a payment and deduction statement.
The nil return
A month with no subcontractor payments still needs a return saying so. Alternatively you can tell HMRC you have temporarily stopped using subcontractors, which suspends the requirement.
Do neither and the £100 penalty applies exactly as if you had paid out thousands and hidden it. It is the most common CIS penalty we deal with, and the most annoying, because there was nothing to declare and nothing to pay.
The penalty scale
| How late | Penalty |
|---|---|
| 1 day | £100 |
| 2 months | £200 |
| 6 months | £300, or 5% of the CIS deductions if higher |
| 12 months | another £300, or 5% if higher |
Beyond twelve months a further penalty of up to £3,000, or 100% of the deductions, becomes possible.
These are per return. A contractor who quietly stops filing does not accrue one penalty growing slowly; they accrue a new one every month, each on its own escalating scale. It is the fastest-compounding penalty regime a small business is likely to meet.
Put the monthly cycle on someone else's calendar
Verification, deductions, the return by the 19th and the statements to your subcontractors — handled every month, so the only CIS deadline you have to remember is none of them.
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Free assessment first. If there is work to do, you get a fixed quote in writing before anything starts.
Getting the rate wrong
Verification exists to protect you, not the subcontractor. Under-deduct — pay someone at 20%who should have been at 30% — and HMRC can pursue you for the difference. The money has gone to the subcontractor and the liability has stayed with you.
Verify before the first payment, and again for anyone you have not paid in the current or previous two tax years. A verification takes a minute. Recovering an under-deduction from a subcontractor who has moved on takes rather longer, if it happens at all.
Questions people ask
When is the CIS monthly return due?
The 19th of every month following the end of the tax month. Tax months run from the 6th to the 5th, so the month ending 5 June is filed by 19 June.
I paid no subcontractors this month. Do I still file?
Yes. A month with no subcontractor payments still needs a nil return, or an inactivity request. A missed nil return carries the same £100 penalty as a missed real one, and it is the single most common CIS penalty we see.
What are the penalties?
£100 at 1 day; £200 at 2 months; £300, or 5% of the CIS deductions if higher at 6 months; another £300, or 5% if higher at 12 months. Beyond twelve months a further penalty of up to £3,000, or 100% of the deductions, becomes possible. They are per return, so a contractor who stops filing for a year accumulates twelve of them.
Do I have to verify every subcontractor?
Before the first payment to each one, yes — and again if you have not paid them in the current or previous two tax years. Verification is what tells you which rate to deduct at; guessing means either over-deducting from them or under-deducting and owing HMRC the difference yourself.
What if I got the rate wrong?
If you under-deducted, HMRC can pursue you for the shortfall — the liability sits with the contractor, not the subcontractor. That is the reason verification is not optional paperwork.
Am I a contractor if I only occasionally use subcontractors?
You are within CIS as a contractor if you pay subcontractors for construction work, however occasionally. Businesses outside construction can also be caught where their spending on construction operations is high enough — a rule that surprises property companies and larger landlords in particular.
Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.
Reviewed 19 October 2026.
Part of our work on cis and construction — if you want someone to take it off your hands, start with our CIS accountant page.