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by

Björgvin Vigfússon

CIS300 & Payment/Deduction Statements (UK 2025/26): The Developer’s Guide

Who this is for: UK property developers, main contractors and specialist subs who want zero-drama CIS compliance, clean month-end packs, and defendable records.

Why it matters: Each tax month you must (a) calculate deductions correctly, (b) issue Payment & Deduction Statements to any sub you’ve deducted from, and (c) file the CIS300 by the 19th and pay CIS by the 22nd (electronic). Miss any step and you risk penalties and cash-flow pain. GOV.UK

What is the CIS300?

The CIS300 is your monthly return of payments made to subcontractors: who you paid, how much of the labour element you deducted from, and the tax you’re sending to HMRC. File it by the 19th of the month after the tax month (6th→5th). If you made no payments, you don’t submit a nil return, but you must tell HMRC no return is due (or request inactivity if you’ll be dormant for a period). GOV.UK

Pay the deductions to HMRC by the 22nd (electronic) / 19th (post). GOV.UK

Software tip: HMRC warns no negative values are accepted on CIS returns, use zero and keep a working paper note for any corrections. GOV.UK

What’s a Payment & Deduction Statement (PDS)?

If you make a CIS deduction from a sub, you must give them a Payment & Deduction Statement within 14 days of the end of the tax month (i.e., by the 19th). You can issue one consolidated monthly statement or one per payment as long as each tax month is covered. Electronic is fine if both parties agree and the sub can store/print it. GOV.UK

Minimum contents (HMRC list):

  • Contractor: name and Employer PAYE reference
  • Period: end date of the tax month (e.g., “Tax month ending 05 June 2025”)
  • Subcontractor: name; UTR; unmatched verification number if higher-rate (30%) was used
  • Figures: gross paid (excl. VAT); materials/plant etc. that reduced the CIS base; amount deducted
    (Template example appears in CIS340 Appendix E.) GOV.UK

The flow (copy this into your month-end checklist)

  1. Status & verification first: confirm the engagement isn’t employment (CEST note on file); verify the sub and record rate (0/20/30).
    → Read: CIS isn’t employment status: getting PAYE vs subcontractor right and Subcontractor verification (CIS). GOV.UK
  2. Calculate the CIS base: deduct VAT, materials, eligible plant/fuel/consumables, manufacturing/prefab from the invoice, CIS applies to the remaining labour only. GOV.UK
  3. Issue PDS by the 19th (14 days after month end) with all required fields; store copies. GOV.UK
  4. File CIS300 by the 19th; pay by the 22nd (electronic). Reconcile to your PDS totals. GOV.UK

Worked example (one sub; monthly)

  • Sub verified 20%.
  • Invoice lines: Labour £10,000, Materials £4,000 (+ VAT treatment handled separately—see DRC note below).
  • CIS base = £10,000 → deduction £2,000.
  • PDS shows: gross paid £14,000 (excl. VAT), materials £4,000, amount liable £10,000, deducted £2,000, payable £12,000.
  • CIS300: include this payment and deduction. Pay £2,000 to HMRC by the 22nd (electronic). GOV.UK

DRC interaction: if the supply is in scope of the VAT Domestic Reverse Charge, you do not charge VAT on the invoice; the customer reverse-charges on the full supply (labour + related materials). CIS still applies to labour only. Ensure invoices carry the correct reverse-charge wording and keep end-user letters where relevant. GOV.UK
→ Read: Reverse Charge VAT pitfalls and CIS vs VAT Domestic Reverse Charge: when both apply

Penalties if you miss it

  • Late CIS300: £100 at 1 day, £200 at 2 months, then £300 or 5% of the liability at 6 and 12 months (whichever is higher; higher penalties possible in serious cases). File on time. GOV.UK

How subs use the PDS (refunds/offsets)

  • Limited company subcontractors: claim CIS suffered through payroll (EPS) to offset against PAYE/NIC, don’t claim via Corporation Tax. GOV.UK
  • Sole traders/partnerships: enter CIS deducted on the Self Assessment return to reconcile at year-end. GOV.UK

Doing CIS300 & PDS in software

Most stacks can handle verification, deduction maths, statements and CIS300 filing. We’ll lock templates/wording and map codes so the PDS, CIS300, and bank postings agree:

Common mistakes (and quick fixes)

  • Issuing the PDS late (after the 19th): fix by sending the statement immediately and tightening your month-end calendar. GOV.UK
  • Missing the unmatched verification number when 30% rate used: add it, HMRC checks PDS against CIS300. GOV.UK
  • Negative lines on returns: HMRC won’t accept, use zero and retain your adjustment memo. GOV.UK
  • Confusing DRC with CIS: DRC covers the VAT on the whole supply; CIS applies to labour. Train your team and lock the templates. GOV.UK

Strong FAQ (practical & defendable)

When exactly is the PDS due?
Within 14 days after the end of the tax month, so by the 19th. You can issue monthly or per-payment, but the month must be covered. Electronic is fine if the sub can store/print it. GOV.UK

What must the PDS include?
Contractor name & Employer PAYE ref; tax month end; sub name & UTR; unmatched verification number if higher-rate used; gross paid (excl. VAT); materials/plant reducing the base; amount deducted. See CIS340 Appendix E. GOV.UK

Do I have to file a CIS300 if I made no payments?
You don’t file a nil return, but you must tell HMRC no return is due (and you can request inactivity if appropriate). GOV.UK

When do I pay the deductions over?
By the 22nd of the following month (electronic) / 19th (post). GOV.UK

What happens if my CIS300 and PDS totals don’t match?
HMRC may not accept a claim for credit/repayment—keep your PDS and CIS300 reconciled each month. GOV.UK

Where can subs reclaim CIS deductions?
Limited companies via EPS/payroll; sole traders/partnerships via Self Assessment. GOV.UK

Related guides & spin-offs (internal links)

Next steps

Want this set up cleanly—no rework?
Book a 20-minute CIS Month-End Fix. We’ll:

  • lock your PDS template (with correct fields/wording),
  • map Xero/QuickBooks/Sage to produce matching PDS ↔ CIS300, and
  • build a Compliance Calendar (verify → calculate → PDS → CIS300 → pay by 22nd).

You’ll leave with: a defendable PDS template, a reconciled month-end pack, and a simple checklist your team can run.
→ Book now

Source notes (GOV.UK)

  • File monthly returns (CIS300) by the 19th; no negative values; what to include. GOV.UK
  • Pay CIS deductions by the 22nd (electronic) / 19th (post). GOV.UK
  • PDS timing (14 days), electronic delivery, required contents; HMRC cross-checks to CIS300. GOV.UK
  • CIS340 Appendix E — example PDS template/fields. GOV.UK
  • Nil returns / inactivity policy (manual). GOV.UK
  • Penalty timetable for late CIS returns. GOV.UK
  • CIS base calculation (what to exclude before deducting). GOV.UK
  • DRC interaction (scope & invoicing). GOV.UK