How To Prepare A CIS Payment And Deduction Statement

If you make a deduction under the Construction Industry Scheme, HMRC says the subcontractor must receive a written payment and deduction statement within 14 days of the end of the tax month. A tax month runs from the sixth of one month to the fifth of the next, so the statement for 6 May to 5 June is due by 19 June.

HMRC publishes an example payment and deduction statement and CIS340 lists the fields that must be included. This article is a practical workflow for preparing that statement. It is general information, not tax or accountancy advice.

The Fields To Include

CIS340 says contractors can choose the style of the statement, but it must include:

• contractor name and employer tax reference
• tax-month end date or payment date, depending on how the statement is issued
• subcontractor name
• subcontractor UTR
• personal verification number where the subcontractor could not be verified and the higher rate was used
• gross amount paid
• amount liable to deduction
• amount deducted

The HMRC example statement also shows gross amount paid excluding VAT, less cost of materials, amount liable to deduction, amount deducted, and amount payable.

The Calculation

Start with the gross invoice amount. HMRC says to take away VAT and specified items such as consumable stores, plant hire, manufacturing or prefabricating materials, and materials paid for directly by the subcontractor. Then apply the CIS percentage rate HMRC gave you when the subcontractor was verified.

At the time reviewed, GOV.UK lists:

• 20% for registered subcontractors
• 30% for unregistered subcontractors
• 0% where the subcontractor has gross payment status

Worked example:

| Line | Amount | |---|---:| | Gross paid excluding VAT | GBP 2,400 | | Less materials | GBP 600 | | Amount liable to deduction | GBP 1,800 | | CIS deduction at 20% | GBP 360 | | Net amount paid | GBP 2,040 |

The important review point is that the percentage is applied after the allowed exclusions, not automatically to the whole invoice total.

Review Checks Before Issuing

Before you issue statements or file the monthly return, check:

• the subcontractor has been verified with HMRC where required
• the rate used matches HMRC's status for that subcontractor
• the UTR is present and looks complete
• a verification number is recorded where the higher rate was used because verification failed
• materials/excluded items have evidence and do not exceed the gross payment
• VAT and domestic reverse-charge treatment are handled outside the CIS statement workflow
• the monthly return is filed by the 19th
• deductions are paid to HMRC by the 22nd if paying electronically, or by the 19th if paying by post

If you made no subcontractor payments, GOV.UK says you should either file a nil return or tell HMRC you have temporarily stopped using subcontractors.

Tool

The CIS Monthly Reconciler is a browser-based review aid. It applies the HMRC-rate arithmetic to figures and statuses you enter, flags common review items, prepares statements using HMRC-listed fields, and exports a CIS300 review summary.

It does not verify subcontractors, decide whether a payment is within CIS, file returns, pay HMRC, or give tax/accountancy advice.

Try the free single-payment checker first: Run the free checker.

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Sources reviewed on 19 June 2026: GOV.UK "What you must do as a CIS contractor" pages, CIS340 contractor/subcontractor guide, and HMRC example payment and deduction statement. Re-check current GOV.UK guidance before relying on any rate, date or field.