How to calculate CIS Subcontractor payments?

Make the deductions based on the subcontractor’s status with HMRC, which you might need to verify yourself. The deductions will be multiplied by the gross amount. This will be 20% or 30% depending on whether the subcontractor is registered under CIS.

Are expenses excluded from CIS?

When calculating your payment to the subcontractor, qualifying materials are excluded from the gross amount.

What is the CIS payment process?

Once you’ve made the deductions, make the net payment to the subcontractor with a complete record of materials, deductions, and payments. You would then pay the deduction to HMRC regularly. This can generally be done either monthly or quarterly.

Streamline CIS accounting and stay fully compliant with HMRC requirements

The Construction Industry Scheme (CIS) brings specific reporting, deduction and compliance responsibilities for contractors and subcontractors. bluQube’s CIS accounting tools simplify every stage of the process, from accurate deduction calculations and automated subcontractor statements to intuitive reporting and one-click filing of monthly returns, helping finance teams reduce risk, save time and keep HMRC records clean.

Why Construction Industry Scheme (CIS) Accounting Matters

CIS accounting is not a niche admin task; it’s a regulatory requirement that directly affects cash flow, contractor relationships and HMRC liability. Mistakes in deduction calculations, late or incorrect monthly returns, or poor record keeping can lead to penalties, expensive reconciliations and strained subcontractor relationships. For finance directors and accounts teams working in construction or with construction suppliers, robust CIS processes protect the business and its reputation. Accurate CIS accounting supports reliable cash forecasting, reduces the administrative burden of manual calculations and ensures timely, auditable submissions to HMRC, giving you confidence that your compliance is defensible and your subcontractor payments are handled professionally.

How does it work?

bluQube integrates CIS controls directly into your accounting workflows so compliance happens as part of your day-to-day processes rather than as a separate, error-prone chore. Subcontractor records are centrally managed with status flags for verification, deduction and tax status. When invoices are processed, the system applies the correct deduction rules and posts the entries automatically to your ledgers. Built-in validation checks highlight missing or inconsistent data before it reaches a return, and role-based permissions ensure only authorised users can make tax-affecting changes. The outcome is a single system-of-record where CIS activity is visible, auditable and reconciled in real time.

Automatically generate sub-contractor statements

Generating accurate subcontractor statements is essential for clear communication and dispute avoidance. bluQube produces detailed, professional statements that show gross payments, CIS deductions and net amounts in a format that is easy for subcontractors and internal teams to review. These statements can be issued on demand or scheduled to run at regular intervals, reducing manual admin and improving transparency between the contractor and their supply chain.

Automatically generate sub-contractor new

Eliminate manual CIS payment calculations

Manual calculation of CIS deductions is time-consuming and increases the risk of human error. bluQube automates the deduction process by applying the correct CIS rates and rules based on each subcontractor’s verification status. Calculations post automatically to your nominal ledgers and are reflected in creditor balances so your accounts always match actual payments. This automation reduces reconciliation work, minimises write-off risk and removes the need for spreadsheet-based calculations that are difficult to control and audit.

Intuitively report and audit CIS payments

Effective reporting and auditability are central to good CIS governance. The system provides searchable transaction histories and ready-to-use reports that summarise deductions, payments and subcontractor activity. Finance teams can quickly produce the evidence required for internal reviews or HMRC audits, demonstrating how deductions were calculated and posted. Because every communication and transaction is retained within the system, your audit trail remains complete and defensible.

Save time filing monthly CIS returns

Filing CIS monthly returns can be a repetitive but essential task. bluQube simplifies this by packaging validated deduction data into ready-to-file returns, reducing the time spent preparing and checking submissions. Where applicable, the software can integrate with HMRC filing channels to upload returns electronically, removing another manual step and lowering the chance of submission errors. The result is faster, more reliable return processing and fewer last-minute rushes at month end.

Always stay CIS compliant

Compliance requires constant attention to changing rules, verification statuses and accurate record keeping. bluQube’s CIS module supports compliance through built-in validation rules, continuous reconciliation and clear alerts when subcontractor details need attention. By centralising CIS activity and enforcing consistent processes, the software helps your team stay on top of regulatory obligations while reducing the day-to-day workload associated with managing subcontractor tax responsibilities.

If you’d like a tailored walkthrough of how bluQube handles CIS accounting for contractors and subcontractors, book a demo to see the CIS functionality applied to real-world construction finance scenarios and ask about HMRC filing options.