How to pay subcontractors under CIS

The seven steps

1. Register as a contractor

   If you pay subbies for construction work, register with HMRC as a CIS contractor. You do this once.

2. Verify each new subbie

   Check them with HMRC before you first pay them. HMRC gives you their rate. How to verify.

3. Split the invoice

   Take off VAT and the materials they paid for. What is left is labour.

4. Work out the deduction

   Labour times the rate: 20%, 30% or 0%. Use the free calculator.

5. Pay the subbie the rest

   Pay them from your own bank, less the deduction.

6. Give them a statement

   A payment and deduction statement, within 14 days of the end of the tax month.

7. Send the CIS300 and pay HMRC

   The return is due by the 19th. Pay HMRC by the 22nd (19th by post). A month with no payments needs a nil return. See the dates.

Keep your records

Keep CIS records for at least 3 years after the end of the tax year they relate to. HMRC can fine you up to £3,000 if you cannot show them.

Do a right to work check too

Paying the CIS right is one job. Checking a subbie can work in the UK is another. Right to work checks for subcontractors.

Sources

• GOV.UK, "Construction Industry Scheme (CIS)" (gov.uk/what-is-the-construction-industry-scheme)
• GOV.UK, "What you must do as a Construction Industry Scheme (CIS) contractor" (gov.uk/what-you-must-do-as-a-cis-contractor)
• HMRC, "Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340)" (gov.uk/government/publications/construction-industry-scheme-cis-340)
• The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2026, SI 2026/289 (legislation.gov.uk/uksi/2026/289)

Let Subbo do this every week

Subbo works out the CIS for every subbie, builds the pay run and keeps your checks. Free 8-week trial for a few friendly firms.

Email for a free trial

Free for 8 weeks. No card. No contract. The button opens your email app. Or write to harry@subboapp.com.