# How to file CIS returns for subcontractors from Sage 50

Verify each supplier with HMRC, deduct at the rate HMRC gives (20%, 30% or none) when you pay, record payments in Sage 50 and send your monthly CIS return to HMRC by the 19th.

The Construction Industry Scheme (CIS) means contractors verify subcontractors with HMRC, usually deduct tax from their payments and report each month what they paid.

## Before you start

- Sage 50 Accounts CIS module (add-on licence, may be in your subscription)
- Your business registered as a contractor with the Construction Industry Scheme (CIS)

## The Sage 50 way

Where to find it: Tools > Activation > Enable Construction Industry Scheme, then the Subcontractors module

1. Activate the module in Tools > Activation > Enable Construction Industry Scheme. Create the nominal codes for CIS labour and materials during activation.
2. Add your Government Gateway login so Sage can verify and submit direct from the software.
3. Turn a supplier into a subcontractor by completing the CIS tab on the supplier record. You can also create a new subcontractor from the Subcontractors module.
4. Verify each subcontractor from the software. The verification details are held on the subcontractor record.
5. Enter the purchase invoice with the CIS nominal codes and the right VAT code. Domestic reverse charge codes are available.
6. When the invoice is paid Sage works out the CIS deduction from the subcontractor status and posts a purchase credit to the CIS tax nominal code.
7. Calculate the CIS return from the payments made against CIS invoices and submit it to HMRC by the 19th after the tax month ends. If you correct a transaction, resubmit the return for that period.
8. Issue monthly subcontractor statements from the software. They can be emailed.

## Limits in Sage 50

- The module is an add-on licence. It may be included in your subscription or bought as an extra.
- It is for main contractors processing subcontractor invoices only.
- CIS transactions must use the CIS nominal codes set during activation.
- The Sage 50 Accounts (UK) CIS module does not apply to the US edition. Sage 50 (US) handles 1099 forms instead.

## Good to know in Sage 50

- HMRC gives the deduction rate when you verify a subcontractor. It is 20% registered, 30% unregistered and 0% for gross payment status.
- The handout is from 2022. Check menu names in your version.

## Common mistakes

- Posting a subcontractor invoice to ordinary nominal codes instead of the CIS labour and materials codes, so the deduction is missed.
- Correcting a transaction after the return is sent and forgetting to resubmit that period.

## Common questions

### Can Sage 50 file my CIS monthly return?

Yes with the CIS module, which is an add-on licence. It verifies subcontractors, works out deductions when invoices are paid and calculates and submits the CIS return to HMRC from the software.

### How does Sage 50 take the CIS deduction?

When a CIS invoice that includes labour is paid, Sage works out the deduction from the subcontractor status. It posts a purchase credit to the CIS tax nominal code. Use the CIS labour and materials nominal codes on the invoice.

### What if I make a mistake on a CIS transaction?

You can correct the transaction. The CIS return for the period it affects must then be resubmitted to HMRC. The module also supports CIS corrections.

## Sources

- https://communityhub.sage.com/cfs-file/__key/communityserver-discussions-components-files/524/Sage-50-Accounts-_2D00_-CIS-_2D00_-Handout.pdf
- https://www.gov.uk/what-you-must-do-as-a-cis-contractor/make-deductions-and-pay-subcontractors
- https://www.gov.uk/what-you-must-do-as-a-cis-contractor/file-your-monthly-returns

Source: https://www.pulsify.tech/how-to/file-cis-returns-for-subcontractors-in-sage-50/ (last checked 2026-10-19)