Do I have to verify every subcontractor?

Yes, before the first payment to them, and again where their status may have changed. HMRC returns the deduction rate to apply. A subcontractor stating their own status is not verification, and the liability for deducting at the wrong rate sits with the contractor.

What is deducted from — the whole invoice?

No. The deduction applies to the labour element. Materials, VAT and certain other costs are excluded, which is why the subcontractor's invoice needs to separate labour from materials rather than presenting a single lump sum.

Do I need to file if I paid nobody that month?

Yes, a nil return is required. Penalties for late filing begin immediately and escalate, so a missed nil return costs money for no benefit.

Does CIS apply to all construction work?

It covers most construction operations in the UK, including site preparation, alterations, demolition, installation and repairs. Some work falls outside, such as certain professional services and off-site manufacture of materials. The boundaries are not always intuitive — check anything unusual.

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CIS explained: verify, deduct, file

Supreme Building Services · in Engaging subcontractors

Three obligations. Verify each subcontractor with HMRC before you pay them; deduct at whatever rate HMRC returns — gross, standard or higher; and file a monthly CIS300 return declaring the payments and deductions. The step that catches people out is verification: assuming a rate, or carrying last year's status forward, means deducting the wrong amount, and the liability sits with the contractor, not the subcontractor.

Who it applies to

CIS covers most construction operations carried out in the UK — site preparation, alterations, demolition, installation, repairs and decorating among them. If you pay subcontractors to do construction work, you are almost certainly a contractor for CIS purposes, whatever your business calls itself.

Some work sits outside the scheme, including certain professional services and the manufacture of materials off site. The boundaries matter and they are not always intuitive, so check rather than assume on anything unusual.

The three steps

1. Verify

Before the first payment to any subcontractor, verify them with HMRC. HMRC returns the deduction rate that applies to that subcontractor. You do not choose it and you cannot infer it — a subcontractor telling you they are "gross status" is not verification.

This is where the mistakes happen. Verification is per subcontractor, and status can change. Carrying an old rate forward is the commonest error and it is the contractor who owes the difference.

2. Deduct

Deduct at the rate HMRC returned, from the labour element of the payment. Materials, VAT and certain other costs are excluded from the calculation — which means you need the subcontractor's invoice to separate labour from materials, and you should not simply accept a lump sum with no breakdown.

3. File

A CIS300 return is due monthly, declaring the payments made and deductions taken. It is due even in months with nothing to declare, where a nil return is required. Penalties for late filing start immediately and escalate.

Where CIS and due diligence overlap

You are already looking a subcontractor up before engaging them — or you should be. Since you are checking whether they are solvent and whether their filings are current, doing the CIS verification in the same pass costs nothing extra and closes both questions at once.

Our free solvency check covers the public-record half: incorporation age, filings, registered office and distress signals. See engaging subcontractors safely for which of those signals actually matter, and why a credit score lags behind filing behaviour.

This is a plain-English summary, not tax advice. CIS has real complexity around scope, mixed contracts, materials treatment and the domestic reverse charge for VAT. Where a job is unusual, take proper advice rather than a website's word for it.

Packaging work out?

Tell us what you are letting and we will check the trades with you — solvency, filings and CIS status — before anything is committed.