The Construction Industry Scheme (CIS) is a set of tax rules created by HMRC to help manage how tax is collected in the construction industry. If you are a contractor, you need to deduct tax from the payments you make to subcontractors and send that amount to HMRC. This helps make sure that subcontractors have already paid enough tax upfront. Knowing how to submit your CIS monthly return to HMRC is important if you want to stay on the right side of the law.
CIS is only for the construction field and covers work like building, fixing, decorating, demolishing, or making changes to structures. Contractors and subcontractors both have their own duties under this scheme, so it is important to understand the rules to avoid mistakes or penalties.
At SAS KPO Services, we help UK accountants to manage their CIS responsibilities with ease. As an outsourcing firm, we take care of your client’s CIS filing and compliance work, so you can stay focused on running your business while we deal with HMRC.
What are CIS monthly returns and why are they important?
Contractors must submit CIS Monthly Returns to HMRC on a monthly basis. These reports show how much was paid to each subcontractor and how much tax was taken off. It is not about paying money just telling HMRC what you have already paid and deducted. This helps HMRC keep track and make sure subcontractors are reporting their taxes correctly.
What you need to know about deadlines and rules:
If you are a contractor registered under the Construction Industry Scheme, it’s a legal requirement to send these returns by the 19th of each month, covering the payments made in the previous tax month.
If you miss the deadline, HMRC will fine you starting at £100 and increasing the longer you delay. So, it is important to file on time to avoid extra costs.
Who needs to file a CIS monthly return with HMRC?
If you hire subcontractors to do construction work for your business, HMRC requires you to register for the Construction Industry Scheme and send in monthly returns. Knowing how to submit your CIS monthly return to HMRC is important to avoid penalties and stay compliant.
A variety of building tasks are covered by CIS, including:
- Building new structures or making changes to them
- Site preparation, refurbishment, and decorating
- Dismantling or demolishing buildings
- Installing utilities like water, electricity, heating, and ventilation
- Conducting repairs or other structural work
If your primary business is construction and you pay subcontractors, HMRC considers you a mainstream contractor. This includes:
- Builders and property developers
- Labour agencies and gangmasters (team leaders)
Even if construction is not your primary business, HMRC might treat you as a deemed contractor if you spend over £3 million on construction within 12 months. This can include organisations like:
- Housing associations and ALMOs
- Local councils
- Government departments
It’s important to know what you need to do to file your CIS returns properly so that your business runs smoothly and there are no unexpected tax problems.
How to submit your CIS monthly return to HMRC: A simple step-by-step guide
Filing your CIS Monthly Return might sound complex, but with a bit of preparation, it is quite straightforward. The key is to stay organised and make sure everything is correct before you send it to HMRC.
Contractors must report details for every subcontractor they have paid during the month. This includes:
- The subcontractor’s name
- Total payment before tax
- How much tax was deducted
- The final amount paid
Easy steps to file your CIS monthly return:
Get your info ready
Collect all payment records for each subcontractor. Make sure you know how much you paid, how much the goods cost, and how much tax you took out.
Log in to HMRC’s CIS portal
Go to the HMRC website and sign in. If it is your first time, you will need to register for the CIS online service.
Add subcontractor details
Enter the correct information for each subcontractor. Double-check names, amounts, and deductions.
Review everything
Before hitting submit, review the whole return to make sure there are no mistakes.
Submit and save a copy
Once you are confident the details are accurate, submit your return. Save the confirmation as proof you have filed it.
Mistakes to watch out for:
- Entering the wrong details mistakes could lead to penalties.
- Missing the deadline the return must be submitted by the 19th of every month.
Tips for easier filing:
- Keep your records updated after every payment.
- CIS software can help you enter data more quickly and with smaller errors.
CIS late filing penalties – What happens if you miss the deadline
If you do not submit your CIS monthly return on time, HMRC will charge you a penalty. The longer you delay, the higher the fine becomes. Here is how it works:
- 1 day late – £100
- 2 months late – £200
- £300 or 5% of the CIS deductions, whichever is higher, for being 6 months late.
- Over 12 months late – An extra penalty of up to £3,000 or 5% of the CIS deductions, whichever is higher
If you believe the penalty is unfair, you can appeal within 30 days of the date on HMRC’s notice.
Avoid unnecessary fines, always file your return on time even if you made no payments to subcontractors for that month. In that case, you should submit a CIS Nil Return to keep your records clear and penalties away.
Let us oversee the hassle for you
Managing CIS Monthly Returns can accept your valuable time and energy especially with all the deadlines, rules, and detailed reporting. However, you don’t have to work alone.
At SAS, we help UK accountants and contractors stay fully compliant with HMRC by managing their CIS filing and tax responsibilities accurately and on time. Whether it is preparing your monthly returns, avoiding penalties, or submitting Nil Returns, our team takes care of everything so you can focus on growing your business.
Need help with your CIS returns or looking to outsource your accounting work?
Contact us today and let our experts support your accounting needs with confidence and ease.
Shivani Soni (Digital Marketing Specialist) writes this blog
