Do I need to file if I paid no subcontractors?

Yes, you must file a nil return even if you made no payments to subcontractors in that month. This keeps your CIS record up to date and avoids penalties.

How do subcontractors get CIS refunds?

Subcontractors can claim a refund if their CIS deductions exceed their tax bill. They do this by completing a Self Assessment tax return and offsetting the deductions.

CIS is not part of Making Tax Digital for Income Tax, but you may need to keep digital records for your other business income. CIS returns are filed separately through HMRC's CIS service.

CIS monthly returns: what contractors and subcontractors need to do

Under CIS, contractors verify subcontractors with HMRC, deduct 20% (30% if unverified, 0% for gross status) from labour payments, and file a CIS300 monthly return by the 19th of the following month. Subcontractors see deductions on their statements and offset them against their Self Assessment or PAYE bill.

Who CIS applies to

The Construction Industry Scheme (CIS) applies to most construction work in the UK. If you're a contractor – a business that pays subcontractors for construction work – you must register for CIS and follow its rules. Subcontractors are individuals or businesses that do construction work for contractors. The scheme covers work like building, decorating, and site clearance, but not some activities like architecture or surveying.

Verification and deduction rates

Before you pay a subcontractor, you must verify them with HMRC. This tells you how much to deduct from their labour payments. The rates are:

20% for registered subcontractors (standard rate)
30% for unregistered subcontractors (higher rate)
0% for subcontractors with gross payment status (no deduction)

Verification is done online through HMRC's CIS service. You'll need the subcontractor's Unique Taxpayer Reference (UTR) and their National Insurance number or company reference. Once verified, you'll get a verification number to keep for your records.

The monthly return and the 19th deadline

As a contractor, you must file a CIS300 monthly return for each tax month. The return lists all payments you made to subcontractors and the deductions you took. The deadline is the 19th of the following month. For example, payments made in April must be reported by 19 May. You can file online through HMRC's service or using software that supports CIS.

If you use TaxCheckIt for your tax software, you can manage CIS returns alongside your other tax obligations.

Payment and deduction statements

After you file your return, you must give each subcontractor a payment and deduction statement. This shows the gross amount paid, the tax deducted, and the net amount. You must provide this by the 19th of the following month too. Subcontractors need these statements to claim deductions on their own tax returns.

How subcontractors reclaim

If you're a subcontractor, you don't need to do anything monthly. Your contractor will give you a payment and deduction statement each month. At the end of the tax year, you'll get a CIS annual statement summarising all your deductions. You then offset these deductions against your tax bill when you complete your Self Assessment return. If your deductions are more than your tax bill, you'll get a refund.

Nil returns and penalties

Even if you paid no subcontractors in a month, you must still file a nil return. This tells HMRC that you had no payments to report. Failing to file a nil return can result in penalties. The penalty for a late CIS return starts at £100, and further penalties apply for continued non-compliance. So it's important to file every month, even when there's nothing to report.

Using software like TaxCheckIt can help you stay on top of your CIS obligations. You can set reminders and file returns quickly, avoiding late penalties.