The short answer
Start here.
A CIS contractor takes 20% from a registered subcontractor's labour, 30% if HMRC cannot match them, or nothing if they have gross payment status. The contractor gives each subcontractor a statement and files a monthly return by the 19th, then pays HMRC by the 22nd. Since 6 April 2026, a contractor that has paid subcontractors before must also file a nil return for any month with no payments, unless it told HMRC in advance.
Are you a CIS contractor, a subcontractor or both?
You are a contractor if you pay subcontractors for construction work. A business outside construction becomes one too once it spends more than £3 million on construction in the 12 months after its first payment (a deemed contractor).
You are a subcontractor if you do construction work for a contractor. If you are both, register as both: you file returns for the people you pay and still claim back the deductions taken from you.
CIS covers construction work across the UK, including Scotland, Wales and Northern Ireland. Before you treat someone as a subcontractor, check whether they should be your employee.
What does a CIS contractor have to do each month?
Tax months run from the 6th of one month to the 5th of the next. Each month you must:
- verify each new subcontractor with HMRC before you first pay them
- deduct the rate HMRC gives you from the labour only, not from VAT, materials the subcontractor bought, plant hire, consumables or fuel other than for travel
- give each subcontractor a payment and deduction statement by the 19th
- file your monthly return so it reaches HMRC by the 19th
- pay HMRC by the 22nd (the 19th if you pay by post)
Do you need to file a CIS nil return?
Yes, if your business has paid subcontractors before. Since 6 April 2026, you must file a nil return by the 19th for any tax month with no payments.
The exception is telling HMRC, at least 14 days before the tax month starts, that you will make none. An inactivity request lasts up to 6 months and can be renewed.
A late monthly return costs £100 at first, and more the later it is. Keep CIS records for at least 3 years after the end of the tax year.
How do subcontractors get their CIS deductions back?
Sole traders and partners claim them on their Self Assessment return. HMRC repays any excess, or you pay the rest by 31 January after the tax year.
Limited companies claim them through payroll, on the Employer Payment Summary (EPS), and HMRC takes them off the PAYE bill. Do not claim them on the Corporation Tax return.
Worked example: one CIS payment in December 2026
Lee (hypothetical) is a builder registered as a CIS contractor. On 10 December 2026 he pays a bricklayer who is registered for CIS and not VAT registered. Her invoice is £3,000: £2,400 for labour and £600 for materials she bought herself.
HMRC matches her at 20%, so Lee deducts 20% of £2,400, which is £480, and pays her £2,520.
The payment falls in the tax month from 6 December 2026 to 5 January 2027. Lee gives her a statement and files his return by 19 January 2027, then pays the £480 to HMRC by 22 January 2027.
These rates are in force for 2026/27. The Budget was delivered on 28 October 2026; any changes for later years will appear here once they become law.
Your next step
Work out a deduction with our CIS deduction calculator and check each month's return and payment dates on our tax calendar. We file monthly CIS returns, verify subcontractors and claim back CIS deductions, alongside your Self Assessment, payroll, VAT and accounts: see CIS accountants or call 0113 460 1786.