The distinction most software reviews miss
Most payroll software is built around employees: it calculates wages, deducts PAYE and National Insurance, handles auto-enrolment and files Real Time Information submissions. A CIS contractor's obligations are different. You deduct a percentage from payments to subcontractors (not employees), verify their status before the first payment, issue deduction statements within 14 days of payment, and file a CIS300 monthly return by the 19th of every following tax month. These are contractor-specific obligations that standard payroll software often handles poorly or not at all.
This guide covers what to look for in payroll software for CIS, compares the main options with honest pricing and capability data, and covers the April 2026 changes that make the monthly filing obligation more demanding than it was before.
What CIS payroll software must do
Before comparing products, it is worth being clear about the minimum requirements. Software for a CIS contractor needs to:
- Verify subcontractors with HMRC before the first payment, setting the correct deduction rate (0% GPS, 20% registered, 30% unregistered).
- Calculate deductions on the labour element only. CIS deductions apply to the labour portion of a payment, not the full invoice. On a £1,000 invoice with £600 labour and £400 materials, the 20% deduction is £120, not £200. Software that does not split labour and materials correctly will over-deduct.
- Generate payment and deduction statements for each subcontractor, issued within 14 days of payment. These are legal obligations, not optional reports.
- File the CIS300 monthly return with HMRC by the 19th of the month following each tax month. From April 2026, nil returns (months with no payments) carry the same obligation and the same penalty ladder.
If a contractor also employs workers directly, the software additionally needs to handle PAYE RTI Full Payment Submissions and auto-enrolment. That is the payroll-plus-CIS combination that fewer products handle cleanly.
The April 2026 nil-return reinstatement
The biggest change for CIS contractors from April 2026 is the reinstatement of mandatory nil returns. Between 2015 and April 2026 contractors were not required to file when they made no subcontractor payments in a tax month. That exemption has been removed. From 6 April 2026 a CIS300 nil return must be filed for every tax month with no payments, unless the contractor has pre-notified HMRC of a period of inactivity.
The penalty ladder applies equally to nil returns and substantive ones:
| Lateness | Penalty |
|---|---|
| 1 day late | £100 |
| 2 months late | £200 |
| 6 months late | £300 or 5% of the CIS liability (whichever is higher) |
| 12 months late | £300 or 5% of the CIS liability (whichever is higher); up to £3,000 or 100% where information is withheld deliberately |
For a contractor who operates seasonally, say a groundworker who has quiet months in winter, this changes the filing calculus entirely. Previously, a quiet month meant no filing obligation. Now it means a nil return by the 19th or a pre-notification of inactivity, every single month. Software that automates nil return preparation and filing directly removes a manual step that carries a £100 penalty when missed. Our guide to contractors' monthly CIS responsibilities covers the full return process.
Main CIS payroll software options compared
| Software | CIS300 direct filing | Deduction statements | Sub verification | Payroll (PAYE) | Auto-enrolment | Indicative cost |
|---|---|---|---|---|---|---|
| Employment Hero (free tier) | Yes | Yes | Yes | Yes | Yes | Free (unlimited employees) |
| HMRC CIS online service | Yes (manual entry) | No | Yes (manual) | No | No | Free |
| BrightPay (cloud) | Yes | Yes | Yes | Yes | Yes | Quote required (cloud subscription) |
| Clear Books (Medium plan) | Yes | Yes | Yes | Yes | Yes | £34 per month |
| Nomi (payroll module) | Yes | Yes | Yes | Yes | Yes | £10 per month (payroll module) |
| FreeAgent | No (prepares data only) | Yes | Yes | Yes | Yes | £0 (NatWest/RBS) or £19-£33 per month |
Employment Hero: the strongest free option
Employment Hero offers a free tier that is genuinely free, with no employee count limit and no feature restrictions on CIS. The free plan includes CIS300 direct filing, deduction statements, sub verification, payroll for employees and auto-enrolment. This combination is unusual in the market: most free-tier payroll tools strip out CIS or restrict employee numbers.
Employment Hero also has a paid tier for managed payroll services at around £12 per employee per month (checked June 2026), but for a self-managing contractor the free tier is a complete solution. The platform is HMRC-recognised. One practical note: Employment Hero is an HR-and-payroll platform built for companies with employees as well as subcontractors. If you have no employees at all and only pay subcontractors, the interface is designed with a broader use case in mind, which some sole-trader contractors find heavier than they need. HMRC's CIS online service is the simpler free alternative for contractors with no employee payroll requirements.
HMRC's CIS online service: the zero-cost baseline
HMRC's CIS online service (accessed through Government Gateway at gov.uk) allows contractors to file CIS300 returns, verify subcontractors and record payments, all for free. It is not software in the usual sense: there is no automation, no payslip generation and no integration with your accounting records. Each month you log in and enter the figures manually.
For a small contractor paying one or two regular subcontractors, the manual approach may be sufficient. For contractors paying five or more subcontractors monthly, the manual entry burden accumulates and the risk of data-entry error grows. The service is also the fallback when any third-party software has an outage: HMRC's service is always available for direct submission. If you use accounting software that prepares but does not file CIS300 (FreeAgent, for example), HMRC's online service is where you complete the submission.
BrightPay: strong for multi-sub contractors
BrightPay has transitioned to a cloud-only platform from the 2026/27 tax year. It includes batch CIS300 filing, which is useful for contractors running multiple subcontractors or for accountants managing CIS returns for several contractor clients. Pricing for the cloud platform is based on employer and employee count and requires a direct quote from BrightPay; the previous desktop pricing of approximately £79 to £289 per year by employee tier no longer applies to the cloud product.
BrightPay's CIS300 batch submission is one of the stronger features in the market: multiple returns can be submitted in a single session, reducing the filing burden for a busy contractor. It handles the full payroll suite alongside CIS. One limitation: the cloud platform caps employer files at 300 employees, which is not a constraint for most CIS contractors but is worth knowing if your construction business also runs a large PAYE workforce.
Clear Books: accounting plus CIS in one platform
Clear Books includes CIS300 filing, subcontractor verification and deduction statements on its Medium plan at £34 per month (checked June 2026, excluding VAT) and above. The Small plan at £16 per month does not include CIS functionality. Clear Books is an accounting platform as much as a payroll tool, which means it handles invoicing, bookkeeping and VAT alongside CIS and payroll in a single interface. For a contractor who wants everything in one place and does not want to combine a separate accounting tool with a separate payroll tool, Clear Books is worth comparing.
The domestic reverse charge for VAT is relevant to many CIS contractors from March 2021 onwards. Contractors who receive invoices from VAT-registered subcontractors under the reverse charge (where the customer accounts for VAT rather than the supplier) need software that handles both the CIS deduction and the VAT treatment correctly on the same invoice. Clear Books handles this.
Nomi: purpose-built for CIS and accountants
Nomi positions itself specifically for construction and accountancy practices. The payroll module costs £10 plus VAT per month (checked June 2026) and includes CIS management, sub verification and direct HMRC submission. Nomi also has a bookkeeping module at £15 plus VAT per month, making a combined accounting-plus-payroll-plus-CIS solution available at £25 plus VAT per month if both modules are taken. That is competitive against Clear Books at £34 per month.
Nomi does not restrict functionality within its plans, which means CIS features are not locked behind higher tiers. For an accountant managing multiple CIS contractor clients, Nomi is designed with that use case explicitly in mind.
Payroll-only vs all-in-one: which is right for you
The clearest way to choose is to answer two questions. First, do you have employees on PAYE as well as subcontractors under CIS? If yes, you need software that handles both RTI payroll submissions and CIS300 returns. Employment Hero, BrightPay, Clear Books and Nomi all do this. HMRC's CIS online service does not handle PAYE payroll. Second, do you want your accounting (invoicing, bookkeeping, VAT) in the same platform as your payroll and CIS? If yes, Clear Books, Nomi with both modules, or FreeAgent (with its CIS300 limitation noted) are worth considering. If you prefer separate tools, Employment Hero for payroll/CIS and a simple bookkeeping tool alongside is a common combination.
Our guide to the best CIS accounting software covers the accounting side in more detail, including Xero, QuickBooks and Sage for contractors who need both accounting and CIS in one platform.
The verification obligation and April 2026 due diligence
Whatever software you choose, the legal obligation to verify each subcontractor with HMRC before the first payment sits with you, not with the software. Software makes verification faster by connecting to HMRC's API, but the legal duty and the consequences of getting it wrong are yours.
From 6 April 2026, Finance Act 2026 introduced a tougher fraud-protection framework. A contractor who makes a payment knowing, or having reason to know, that a connected party has deliberately failed to comply with CIS obligations is liable to a penalty of 20% of the payment under FA 2004 ss.62A/62B. The "should have known" standard means that failing to carry out due diligence is sufficient for the penalty, with no need for HMRC to prove intent. GPS removed on fraud grounds now triggers a five-year reapplication ban.
The three due-diligence steps required before each payment are: re-verify the subcontractor's CIS status with HMRC, run a Companies House legitimacy check, and carry out bank account name verification. No payroll software currently automates all three of these steps. They require manual action alongside whatever software you use. The CIS monthly return guide covers the full return process including the verification step. The CIS penalties guide covers what happens when returns are late or filings are incorrect.
Choosing: a practical decision tree
- No employees, 1-3 subcontractors, want zero cost: HMRC CIS online service or Employment Hero free tier.
- No employees, 4-plus subcontractors, want automation: Employment Hero free tier or Nomi payroll module (£10 plus VAT per month).
- Employees and subcontractors, want payroll-plus-CIS: Employment Hero, BrightPay (quote required) or Clear Books Medium (£34 per month).
- Accounting plus payroll plus CIS in one platform: Clear Books Medium, Nomi with both modules (£25 plus VAT per month combined), or QuickBooks (accounting, with separate payroll module for CIS300).
- NatWest or RBS business customer: FreeAgent is free but does not file CIS300 directly. Pair it with HMRC's online service for CIS300 filing.
If your situation includes more subcontractors than you can manage easily, or your CIS payments are substantial enough that a missed nil return or a late deduction statement carries real financial risk, professional support from a CIS-specialist accountant is worth considering alongside whatever software you choose. The software handles the mechanics; the compliance judgments still require human oversight.