CIS end of year: what contractors and subcontractors must do

There is no annual CIS return

If you have searched for "CIS end of year return" expecting to find a separate annual filing event, the most useful thing this guide can tell you is that no such filing exists. The old annual CIS return was abolished in April 2007, when the current scheme with monthly CIS300 returns replaced it; the separate PAYE end-of-year return (P35) later went too when Real Time Information arrived. CIS now runs entirely on monthly CIS300 returns filed by contractors throughout the year.

Year-end under CIS is not a distinct administrative event in the way that payroll year-end is. It is simply the close of the final tax month on 5 April, which triggers the last monthly return and marks the point at which subcontractors begin gathering the information they need to recover their deductions. The obligations that follow depend on whether you are a contractor, a sole trader subcontractor, or a limited company subcontractor.

What contractors must do at year-end

File the final CIS300 by 19 April

The tax month ending 5 April is the last month of the tax year. Contractors must file a CIS300 for that month in the usual way, by 19 April. The mechanics are identical to every other monthly return: you report each subcontractor paid in the tax month, the gross amount, and the deduction applied at either 20% (registered), 30% (unregistered), or 0% (gross payment status). Payment of deductions owed to HMRC is due by 22 April electronically or 19 April by cheque.

For a full walkthrough of the monthly return process, deadlines, and the penalty ladder for late filing, see our CIS monthly returns guide.

Confirm all deduction statements have been issued

Every time a contractor pays a subcontractor and applies a deduction, they must issue a payment and deduction statement. There is no annual batch: the obligation runs payment by payment throughout the year. At year-end, contractors should check their records to confirm that every payment made during the year has a corresponding statement and that the subcontractor received a copy.

This matters at year-end because subcontractors need those statements to recover their deductions, whether through Self Assessment or through the EPS route. A missing statement discovered after 5 April can delay a subcontractor's repayment claim by weeks. You can produce statements at any time; if you have missed any, issue them now rather than waiting to be asked. Our CIS payment and deduction statement template covers what each statement must contain and provides a ready-to-use format.

For more detail on what payment and deduction statements must include and when they must be issued, see our guide to CIS payment and deduction statements.

Retain records for at least three years

HMRC can inspect CIS records up to three years after the end of the tax year. Contractors must keep copies of all CIS300 returns filed during the year, the verification records for each subcontractor showing the status confirmed by HMRC, all deduction statements issued, and a record of which rate applied to each subcontractor and why. Three years is the minimum; many contractors keep records for six years to align with the general limitation period.

What sole trader subcontractors must do at year-end

Sole traders cannot use the EPS route to recover CIS deductions in real time. Their only recovery mechanism is the Self Assessment tax return for the tax year in which the deductions were suffered.

Gather all payment and deduction statements

Collect every payment and deduction statement received from contractors during the tax year (6 April to 5 April). Add up the total deductions shown across all statements. That figure is what you enter in the CIS deductions box on your Self Assessment return. HMRC applies it against the income tax and Class 4 National Insurance you owe for the year, and repays any excess through the Self Assessment process in the usual way.

If you are missing a statement for any payment, contact the contractor now. You cannot claim a deduction you cannot evidence, and waiting until January to discover a gap wastes months.

Check the deduction rate applied to each payment

Each statement shows whether the contractor deducted at 20% or 30%. A 30% deduction means you were unregistered or unverified at the time of payment. If you were in fact registered, that is a rate error the contractor should correct. Raise it with them before the tax year is too old, because a corrected statement changes the figure on your return and the timing of your recovery.

What limited company subcontractors must do at year-end

Limited companies recover CIS deductions monthly by offsetting them against PAYE and National Insurance through the Employer Payment Summary. By 5 April, any deductions not yet offset have accumulated as a credit on the company's PAYE account. Recovering that credit requires two steps.

File the final EPS by 19 April

The final EPS for the tax year must be submitted by 19 April. It should include a year-to-date total of all CIS deductions suffered, matching the cumulative figures from every statement received throughout the year. HMRC uses this final EPS to establish the total credit the company is entitled to claim.

If you missed an EPS in any earlier month (for example, in a month where no PAYE was due and the filing slipped), file a correcting EPS now before the year-end submission. A gap in the EPS sequence means HMRC has no record of that month's deductions and the credit will not be available to claim.

Reconcile EPS totals to your deduction statements

Before submitting your repayment claim, check that the year-to-date figure on your final EPS matches the total deductions shown across all payment and deduction statements received from contractors. Each contractor will have reported what they deducted on their own CIS300 monthly returns. If your EPS figures do not match, HMRC will query the claim.

The most common sources of mismatch are: a deduction statement that arrived late and was not included on the EPS for the right month; a contractor who reported a different figure on their CIS300 than they told you they had deducted; and transcription errors when entering monthly totals into payroll software. Check each month individually, not just the year-to-date total, because an error in one month may be masked by an offsetting difference in another.

Make the repayment claim to HMRC

The year-end credit does not repay itself. After 5 April, the company must submit a claim to HMRC, either through the online CIS service within the HMRC Business Tax Account, or by writing to PT Operations North East England, HM Revenue and Customs, BX9 1BX. The claim asks the company to specify whether it wants a cash repayment to its bank account or an offset against another liability such as Corporation Tax or VAT. Both options are available; the choice sits with the company.

HMRC does not publish a processing target for these claims. In practice, most claims are resolved within 4 to 12 weeks of submission. HMRC asks companies not to chase until around 40 working days have passed from the date of submission. Calling before that point rarely speeds things up and does not change your position in the processing queue.

For a detailed walkthrough of the claim process, what to do if a credit shows as unallocated, and how to handle offsets against Corporation Tax, see our guide to reclaiming unallocated CIS credits.

Common year-end mismatches and how to fix them before claiming

Missing deduction statements

If a contractor has not issued a statement for a payment made during the year, ask for it in writing now. Limited companies need the figure to complete their final EPS accurately. Sole traders need the figure for their Self Assessment return. Neither party should estimate; the figure on the return or EPS must match what HMRC holds from the contractor's CIS300.

EPS and CIS300 discrepancies

HMRC cross-references the deduction figures on EPS submissions against the figures contractors reported on their CIS300 monthly returns. Where these differ, the credit is queried or withheld pending explanation. If you find a discrepancy, the fix is to agree the correct figure with the contractor, then file a correcting EPS before submitting the year-end claim. Do not submit the claim with the discrepancy in place and hope HMRC resolves it; that approach extends processing time significantly.

Deductions at the wrong rate

If a contractor applied 30% when you hold gross payment status, or 20% when you are unregistered and 30% should have applied, the statement is incorrect. The contractor must issue a corrected statement and file an amended CIS300 for the relevant month. This needs to happen before you use the figure in an EPS or Self Assessment return, because submitting a claim based on an incorrect figure creates a further reconciliation problem later.

A note on timing

The year-end actions above do not all fall on the same date. The contractor's final CIS300 is due by 19 April. The limited company's final EPS is also due by 19 April. The repayment claim can be submitted any time after 5 April, once the EPS is reconciled. Sole traders file their Self Assessment return by 31 January following the end of the tax year, though filing earlier means the deduction credit is applied and any repayment is issued sooner.

None of these are new obligations. They are the same monthly and annual tax-return obligations that already exist, applied to the final period of the tax year. The difference at year-end is that all the threads come together at once, and a mismatch in any one of them delays the others.