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Setting up for Construction Industry Scheme (CIS)

To set up your business to use the CIS function you will need to follow the below steps:


A new plan will need to be set up for you to use, which includes CIS.  Open the business which will be used to pay CIS subcontractors.  Navigate to Payroll Settings > Business Management > Subscription.  Here you will see a plan which includes subcontractors in the additional charges and has CIS in the plan name, click to select this plan.

HMRC settings

In the HMRC settings page you will need to enter the Unique Taxpayer Reference (UTR) of the contractor in this field. This is a 10 digit reference:


A little further down the HMRC page, enter the submission details in the RTI submission section - if this business is paying only subcontractors, then the submission credentials can be entered into the HMRC user Id and password fields, if this business is paying normal employees and subcontractors and the submission credentials are the same for both, they can also be entered here.  

In the unusual circumstance where the RTI details and CIS credentials are different, you can tick the ‘Use alternative CIS credentials’ and enter the CIS credentials into the new fields:



Pay slip settings

In order to send an email notification including links to pay slips and Payment & Deduction statements to subcontractors, the pay slip setting "Employees must log in to download pay slips" cannot be selected:



Please note: Subcontractors will always get a Web format pay slip, no matter what is set in the pay slip settings.

Pay Schedules

You need to create a new pay schedule (see this article for assistance with creating a pay schedule), if paying both employees and subcontractors, add CIS into the pay schedule name.

Choose the frequency and in the ‘Included employees’ field click and select ‘Active subcontractors’

Set the Pay run finalisation settings and save. (Please ignore the HMRC settings). Below is an example of how to set up a schedule



Pay Categories

Next you need to create a new pay category (this article will assist you in setting up a pay category) for ‘CIS Labour’. You will need to tick the CIS checkbox and select ‘Apply CIS deduction’. Leave the CIS type as ‘Other’.  Set the Units as ‘Hourly’ if you will be entering the number of hours worked.


You also need to create a new pay category for ‘Materials’ - tick the CIS checkbox, choose Materials as the CIS type, and set the Units as fixed if you will be entering the materials with fixed rates:


You also need to create a new pay category for ‘VAT’ - tick the CIS checkbox, choose VAT as the CIS type and set the Units as fixed:




These are the 3 main CIS pay categories, however, it is possible to set up as many pay categories as you require. The system will use the ‘CIS type’ to sort the pay category values into the relevant areas in the pay run, so be careful to select the correct type.  Also if the ‘Apply CIS deduction’ checkbox is ticked, the system will calculate the CIS deduction on these pay category values, left unticked they will not be included in the CIS deduction calculation.


Add CIS subcontractor records

There are a couple of places where you can start the 'Add CIS subcontractor' wizard:

  • From the employee menu item:



  • From the dashboard:


Each of these places will open the CIS subcontractor wizard.

When you click on 'Add CIS Subcontractor' you will see the following screen:



You will need to enter the trading name or/and the first name of the subcontractor.

The business type for the subcontractor - sole-trader / partnership / company / trust must be entered.

Enter as many of the other details as you can.

Add in the email address if you want the pay slip and Payment & Deduction statement to be emailed as a link to them from the pay run.

Press Next.

You will then be taken to the Tax details page:


You need to enter various details depending on the Business type chosen on the first step of the wizard. 

The Unique Taxpayer Reference (UTR) (this is a 10 digit reference from HMRC for the contractor) and National Insurance Number if this subcontractor is a sole trader.

Once you have filled in the above details you will need to select the relevant Tax Status from the dropdown menu.

If the subcontractor has already been verified then choose the relevant tax status (Standard or Gross) and add the date matched and verification number.

If the subcontractor is unmatched then just add the temporary verification number.

If the subcontractor is still to be verified, then select the Verification required option, if the contract has been agreed, then it is possible to verify the subcontractor now by clicking on the Verify button, or you can verify later from the subcontractor record.

Click Next.

You will then be taken to the Payment details screen:


Here you should select the Pay schedule you set up earlier and the 'CIS Labour' pay category.  

Choose how you want to pay the subcontractor in the payment type field, and if paying by bank transfer enter their bank account details.

The 'Last payment date' can be left blank or can be entered, if you are adding a subcontractor who has not been paid for sometime, but you want them in your list as they may be used in the future.  

The last payment date is checked when a CIS pay run is created, to make sure the subcontractor has been paid within the current or last two years, for re-verification purposes.

Once subcontractors are included in CIS pay runs, then the date paid becomes the new last payment date.

You can click 'Complete' when you have finished entering the details.

Your subcontractor record has now been created and can be found in the Employee list:



They have a badge to show they are a subcontractor and also will show with a red badge ‘Verification required’, if they have this status applied.

Subcontractor record

Clicking on the subcontractor trading name or name in the list will open their record.

Notice there is a section called CIS Details, here you will find all the details you entered from the wizard:mceclip14.png

You can make the subcontractor ‘Inactive’ on this page by ticking the 'Subcontractor inactive' box.

Once a subcontractor is ‘Inactive’, they will show in pink in the list and will not show in any CIS pay runs.


If your subcontractor has an hourly rate, then you can navigate to the Pay Run Defaults and set the rate. 



You should also set the ‘Pay slip notifications’ to ‘Email’ this will allow pay slips and payment and deduction statements to be sent as links via email each pay run.

CIS Pay runs

You will need to create a new pay run - this article will assist you.

Select your CIS pay schedule created above, enter the dates (first time only).

When the pay run is created you will see all your active subcontractors in the pay run:


Unverified subcontractors will show but are greyed out as they will need to be verified before you can pay them. You can click on the pencil icon to edit and verify them and as long as the verification date is before the paid date, then you can pay them by recalculating in the pay run.

Click the arrow to expand each subcontractor you wish to pay, and enter the hours worked and/or rates if not already specified earlier:



Once you have completed the payments for the subcontractors, you can click to check the draft documents, or finalise.

On finalising, any subcontractors who have 0.00 values will be automatically removed from the pay run.




When a CIS pay run has been finalised, the P32 will have been updated automatically and the CIS tab will show the amount of CIS tax which has been deducted for each of the tax months:



CIS300 Monthly Return Report

Each tax month end (which covers a period from the 6th of one month to the 5th of the next), a CIS300 monthly return needs to be run and submitted to HMRC before the 19th.

The report can be found in 'Reports' > 'HMRC Reporting' > 'CIS300 Monthly Returns'.

You will need to select the tax year and tax month you wish to run the report for.mceclip0.png

Once the tax month has been selected, click the Run report button, this will fetch the relevant data. 



There are two sections to the report, the CIS300 Report data tab and the Declaration tab.

You must check the details on the CIS300 Report tab and make your selections in the declaration tab. Note: where there are no values found in a complete tax month, the declaration checkbox for Nil return is enabled, but if there are values in the return, then Nil return checkbox is disabled.

Submissions cannot be made until the declarations have been selected.:


Once you have selected the correct declaration, it is advisable to download a PDF report.


The downloaded PDF report will give you all the information you are submitting to HMRC.


You are now ready to submit the Monthly return to HMRC by clicking on the Submit CIS300 button, you will see that the submission is in progress or awaiting a response from HMRC via a processing bar, once completed, you should receive a success message:


The XML can now be downloaded, if required:



An audit of the submission can be found in the RTI submission messages report, by selecting the message type CIS300ReturnRequest.

Note: Any changes made to subcontractor payments who were already included in a successful CIS300 monthly return submission, will require another submission to be made.  The CIS300 monthly return report will always show the latest data when it loads the tax month data, including any changes you may have made since the submission, but the submission status will still show as submitted successfully.




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