Construction Payroll Services 2026: UK CIS, Costs & Best Providers Compared Quick answer
Construction payroll in the UK often involves two separate but connected processes:
PAYE payroll for employees CIS administration for subcontractors
A good construction payroll setup should therefore be able to handle:
PAYE
National Insurance
RTI submissions
weekly or monthly pay
variable hours
overtime
site allowances
CIS subcontractor verification
CIS deductions
monthly CIS returns
payment and deduction statements
job/site cost allocation
Your construction business What we would compare first
1-5 employees, no subcontractors
Standard payroll software
Small contractor using CIS subcontractors
Payroll/accounting software with CIS
Weekly site workforce
Payroll + time/attendance integration
Growing contractor
Managed payroll + CIS support
Many subcontractors
Specialist CIS software/service
Complex multi-site contractor
Construction payroll + job costing/workforce integration
Want payroll off your plate
Outsourced construction payroll
Compare Construction Payroll Providers
Free quotes • No obligation • Compare payroll and CIS support
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This quote service is best for UK businesses that want to compare outsourced payroll, managed payroll, payroll software, payslips, pension support, CIS payroll or payroll services for growing teams.
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Authored by: Ally Cox (Business Technology & B2B Services Specialist 10+ Years’ Experience)
Reviewed by: James Ward (Telecoms Specialist, 12+ Years Experience)
Last Updated: October 2026
Construction Payroll Cost Calculator Use our payroll calculator to estimate likely payroll costs based on:
employee numbers
pay frequency
CIS requirements
subcontractor numbers
variable pay
pension support
reporting
outsourcing level
Payroll Cost Calculator UK Estimate your monthly payroll cost based on employee numbers, pay frequency, pension duties, CIS, payslips, reports and support level.
Pay frequency
Monthly Weekly Fortnightly Four-weekly Mixed payroll frequencies Weekly payroll usually costs more because it runs more often.
Payroll service type
Payroll software only Managed payroll service Fully outsourced payroll Payroll bureau / accountant Software is usually cheaper; outsourced payroll gives more support.
Business type
Office / admin business Retail / shop Hospitality / restaurant / café Construction / trades Care / healthcare Agency / variable staff Professional services Multi-site business Variable hours, shifts and CIS can increase payroll complexity.
Need workplace pension / auto-enrolment support?
No Basic pension submissions Full auto-enrolment support Includes pension assessment, contributions or pension file uploads.
Need CIS payroll?
No Yes, include CIS Useful for construction businesses paying subcontractors.
Variable pay complexity
Low: fixed salaries Medium: overtime / bonuses High: shifts, tips, commissions or allowances Hospitality, retail and sales teams often need more checks.
Payslip delivery
Digital payslips Employee portal Printed payslips Printed payslips can add admin and postage costs.
Need HR support?
No Basic HR advice Payroll + HR support Useful if you need contracts, absence, holiday or employment advice.
Reporting level
Basic payroll reports Management reports Advanced reports / costing / departments Departmental reporting can be useful for larger teams.
Need year-end support?
Yes No Includes end-of-year payroll checks and employee documents where relevant.
Setup / migration needed?
No setup needed Standard setup / migration Complex migration / multiple payrolls Changing provider mid-year may require extra setup.
Your estimated payroll costs
Estimated monthly cost
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Cost per employee/month
£0
Potential monthly saving
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Enter your payroll requirements to estimate your costs.
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This calculator is an estimate only. Actual payroll costs vary by provider, employee count, pay frequency, payroll complexity, pension duties, CIS, HR support, setup, integrations, reporting and service level.
Key Takeaways
CIS subcontractors are not the same as PAYE employees.
Contractors must verify new subcontractors with HMRC before paying them.
CIS deduction rates are normally 20%, 30% or 0% depending on subcontractor status.
Contractors must submit monthly CIS returns showing payments made to subcontractors.
Payment and deduction statements must be provided where CIS deductions are taken.
Construction payroll can also involve weekly pay, variable hours, overtime and site allowances.
Time and attendance integration can be more valuable than specialist “construction” branding.
Job costing is useful where labour needs to be allocated by site, project or cost centre.
Small contractors may not need a specialist payroll bureau if their existing accounting/payroll software handles CIS adequately.
Growing contractors should compare software against managed or outsourced payroll based on admin time and complexity.
What Is Construction Payroll? Construction payroll is not one special HMRC payroll category.
For many construction businesses, it is a combination of:
normal PAYE payroll for employees
Construction Industry Scheme administration for subcontractors
time and attendance
variable pay
labour-cost allocation
This distinction matters.
An employee should normally be processed through PAYE, and a genuine subcontractor falling within CIS is processed according to CIS rules.
PAYE Employees vs CIS Subcontractors
PAYE employee CIS subcontractor
PAYE tax
Yes
No PAYE payroll deduction
Employee NI
Yes where applicable
No employee NI through contractor payroll
RTI
Yes
No
CIS verification
No
Yes where required
CIS deduction
No
0%, 20% or 30%
Monthly CIS return
No
Yes
Payslip
Yes
Payment/deduction statement where deductions are taken
Our View: Employment Status Comes Before Payroll Software The most important CIS decision is not which software you buy – it’s whether the worker is genuinely a subcontractor rather than an employee.
HMRC requires contractors to declare on their monthly CIS return that subcontractors listed are not employees.
An incorrect employment-status declaration can create serious problems.
Software can calculate deductions correctly, but it cannot make an incorrect employment-status decision compliant.
What Does a Contractor Need to Do Under CIS? If your business is a contractor under the Construction Industry Scheme, key obligations include:
Register as a CIS contractor.
Check whether the work falls within CIS.
Verify new subcontractors.
Use the deduction rate HMRC provides.
Calculate CIS on the correct payment amount.
Pay the subcontractor.
Give a payment and deduction statement where deductions are made.
Submit the monthly CIS return.
Pay CIS deductions to HMRC.
Keep appropriate records.
CIS Subcontractor Verification Before paying a new subcontractor, contractors generally need to verify them with HMRC.
HMRC then tells you whether the subcontractor:
is registered
should have 20% deducted
should have 30% deducted
has gross payment status
You can verify subcontractors through:
HMRC’s CIS online service
commercial CIS software
If you need to verify more than 50 subcontractors, HMRC says commercial CIS software must be used.
Current CIS Deduction Rates
Subcontractor status CIS deduction
Registered subcontractor
20%
Unregistered subcontractor
30%
Gross Payment Status
0%
The percentage is not necessarily applied to the full invoice value.
How CIS Deductions Are Calculated HMRC says contractors should start with the subcontractor’s gross payment and exclude relevant amounts such as:
VAT
qualifying materials
certain plant hire
consumable stores
fuel used for the work, excluding travelling
before applying the relevant CIS deduction rate.
Simple Example
A subcontractor invoices:
Labour: £2,000
Qualifying materials: £500
Ignoring VAT for this simplified example:
CIS deduction base:
£2,000
At 20% CIS:
£400 deduction
This is why construction businesses need software or processes that distinguish labour and eligible materials correctly.
Monthly CIS Returns Contractors must submit a CIS return for each tax month showing payments made to subcontractors.
The CIS tax month runs from:
6th of one month to 5th of the next
The return is due within 14 days of the end of that tax month.
For example, payments between 6 May and 5 June are reported by 19 June.
Returns can be filed using:
HMRC’s CIS online service
commercial CIS software
What If You Paid No Subcontractors? If no subcontractors were paid during a month, you may need to:
submit a nil return
or make an inactivity request where appropriate
Do not simply ignore the CIS return because no deductions were made.
Payment and Deduction Statements Where you make a CIS deduction, you must give the subcontractor a payment and deduction statement.
This shows details such as:
gross payment
materials
CIS deducted
HMRC says this must generally be provided within 14 days of the end of the relevant tax month.
How Much Do Construction Payroll Services Cost?
There is no reliable universal “construction payroll rate”.
Quotes depend on whether you need:
software only
employee payroll
CIS administration
managed payroll
fully outsourced payroll
time integration
job costing
A more useful pricing model is:
Setup Typical pricing approach
Payroll software
Monthly software subscription
CIS accounting software
Monthly package/add-on
Payroll bureau
Base fee + employee/pay-run charges
CIS service
May charge by subcontractor or return
Managed payroll
Quote based
Fully outsourced payroll
Employee/complexity based
Our View: Avoid Generic £X-Per-Payslip Comparisons A construction company with:
20 employees
monthly payroll
no subcontractors
has a completely different workload from a contractor with:
10 employees
weekly payroll
60 CIS subcontractors
site allowances
timesheets
Headcount alone therefore tells you very little about the real cost.
What Makes Construction Payroll More Expensive? Common cost drivers include:
weekly payroll
large subcontractor numbers
frequent CIS verification
multiple sites
variable hourly rates
overtime
site allowances
high staff turnover
job-cost reporting
time-system integration
managed CIS support
Do You Actually Need Specialist Construction Payroll? Not always.
If your company has:
a small number of employees
simple monthly salaries
only occasional subcontractors
standard payroll/accounting software with appropriate CIS functionality may be enough.
Specialist support becomes more useful as:
CIS volume rises
pay becomes more variable
weekly processing increases
multiple sites need costing
admin becomes difficult to manage internally
Best Construction Payroll Options to Compare Rather than ranking providers with arbitrary star scores, we would compare them according to the problem they solve.
Option Best for
Sage
Construction businesses wanting payroll/accounting/CIS integration
Access/COINS Larger construction organisations needing broader construction ERP
IRIS
Payroll bureaus, accountants and managed payroll buyers
MHR
Larger employers needing payroll + HR/workforce capability
Payroll bureau
Small contractors wanting processing handled
Specialist CIS provider
High-volume subcontractor administration
Sage for Construction Payroll Sage is particularly relevant because it has both payroll and construction/CIS capability.
Sage 50 Payroll currently supports:
weekly, biweekly and monthly payroll
HMRC RTI
statutory payments
workplace pensions
departments
cost centres
payroll reporting
Sage People Payroll also supports CIS for larger and more complex payrolls.
Our View on Sage
Sage is a strong comparison where your finance/accounting workflow already sits in Sage.
The ability to combine:
accounting
payroll
CIS
cost centres
can reduce duplicate data entry.
Access / COINS for Construction Access COINS is positioned much more broadly than a payroll tool.
It is relevant to construction businesses looking for an integrated platform across:
finance
HR
payroll
construction operations
project information
Our view: this is more appropriate for larger construction businesses looking at ERP-level transformation than a small contractor simply wanting to file CIS returns.
IRIS for Construction Payroll IRIS is worth comparing where you want:
payroll software
bureau capability
outsourced payroll
accountant-led support
Its strength is broader payroll/accountancy infrastructure rather than being a construction-only platform.
MHR for Larger Construction Employers MHR’s iTrent is more relevant to larger employers needing:
payroll
HR
workforce management
complex pay processing
reporting
For a large construction workforce, that can be more useful than a simple CIS-focused application.
Payroll Software vs Outsourced Construction Payroll
Software Outsourced payroll
Cost
Usually lower
Usually higher
Internal admin
Higher
Lower
CIS processing
You manage it
Provider may handle it
Payroll control
Higher
Shared/lower
Expert support
Software support
Payroll specialist
Best for
Simple/confident internal team
Time-poor or complex contractor
When Should a Contractor Outsource Payroll? We would start comparing outsourced or managed payroll if:
weekly payroll takes too much time
CIS returns regularly become a last-minute task
subcontractor verification is difficult to manage
payroll depends on one internal person
errors keep occurring
the workforce is growing quickly
you operate many sites
Construction Payroll and Time & Attendance For many contractors, the payroll software itself is not the biggest problem.
The problem is getting accurate hours from site into payroll.
A manual workflow might be:
site timesheet → spreadsheet → payroll
Every step introduces another opportunity for:
missing hours
incorrect overtime
duplicate entries
late payroll changes
Integrating payroll with digital time and attendance can therefore be extremely valuable.
See our Time & Attendance Systems guide .
Job Costing and Labour Allocation Construction firms often need to know more than:
“How much did payroll cost?”
They need:
“How much labour did Project A cost?”
Look for systems that can allocate:
hours
wages
overtime
allowances
to:
projects
sites
departments
cost centres
Our View: Job Costing Is Not the Same as Payroll Some payroll systems can provide cost-centre reporting.
But detailed construction project costing often sits in:
accounting software
ERP
construction management software
Do not assume a payroll provider will replace a full job-costing system.
Construction Payroll for Weekly-Paid Workers Weekly payroll increases administration because payroll runs 52 times per year instead of 12.
That means more:
timesheet cut-offs
pay calculations
RTI submissions
employee queries
For weekly payroll, automation and clean time data become particularly valuable.
Construction Payroll for Employees and Subcontractors Together A common contractor setup includes both:
PAYE employees
CIS subcontractors
Your system should keep these populations clearly separate while giving finance a useful overall view of labour costs.
Do not process CIS subcontractors through PAYE merely because both groups work on the same site.
Construction Payroll and Workplace Pensions PAYE employees may also be subject to workplace pension auto-enrolment.
Your payroll system should therefore be able to handle:
employee assessment
contribution calculations
opt-ins
opt-outs
pension files
re-enrolment
CIS subcontractors are a separate population and should not simply be treated as employees for pension purposes.
Construction Payroll and 2026 Payroll Changes Construction employers also need to keep ordinary payroll rules current.
Important 2026 changes include:
Statutory Sick Pay changes from 6 April 2026
new National Minimum Wage/National Living Wage rates
current National Insurance thresholds and rates
Cloud payroll software should be updated to reflect current statutory rules.
Common Construction Payroll Mistakes
treating employees as CIS subcontractors
failing to verify new subcontractors
using the wrong CIS rate
deducting CIS from qualifying material costs
missing monthly returns
failing to issue deduction statements
manually rekeying site hours incorrectly
mixing project costing and payroll records
not reconciling CIS liability
What to Ask a Construction Payroll Provider
Does the system support both PAYE and CIS?
Can it verify subcontractors with HMRC?
Can it process 0%, 20% and 30% CIS status?
Can it separate qualifying materials?
Does it produce payment and deduction statements?
Can it submit monthly CIS returns?
Does it support weekly payroll?
Can it import site timesheets?
Does it integrate with our accounting system?
Can it allocate labour to jobs or cost centres?
Does it support workplace pensions?
How are starters and leavers handled?
What does CIS support cost?
What is charged per employee/subcontractor?
What happens if a CIS return needs correcting?
Compare Construction Payroll Quotes
Our Verdict: What Is the Best Construction Payroll Setup? For most contractors, the right answer is not automatically “buy specialist construction payroll”.
The right setup depends on the real complexity.
Our recommendations:
Small employer, no CIS: standard payroll softwareSmall contractor with CIS: payroll/accounting software with good CIS supportWeekly site workforce: payroll + digital time integrationGrowing contractor: managed payroll/CIS supportMany subcontractors: specialist CIS functionalityLarge contractor: integrated payroll, HR, workforce and construction systems
The key is keeping:
employment status → PAYE → CIS → timesheets → project costing
accurate and connected without confusing them as one process.
Compare UK Payroll Providers
Frequently Asked Questions What is construction payroll?
Construction payroll usually combines ordinary PAYE payroll for employees with CIS administration for genuine subcontractors, alongside variable pay and site-based labour data.
What is CIS?
The Construction Industry Scheme requires contractors to make and report deductions from certain subcontractor payments and pass those deductions to HMRC.
What are the CIS deduction rates?
The standard rates are 20% for registered subcontractors, 30% for unregistered subcontractors and 0% for subcontractors with gross payment status.
Do I need to verify every subcontractor?
New subcontractors normally need to be verified with HMRC before payment. HMRC also requires reverification in certain circumstances where a subcontractor has not appeared on recent CIS returns.
When is the monthly CIS return due?
Returns cover each tax month ending on the 5th and are due within 14 days, normally by the 19th.
Do I need specialist construction payroll software?
Not necessarily. Small contractors may be able to use standard payroll/accounting software with CIS functionality. Specialist services become more useful as CIS volume, workforce complexity and site administration increase.
Can payroll software calculate CIS?
Some UK accounting and payroll packages support CIS verification, deduction calculations and reporting. Check the exact functionality before buying.
Are CIS subcontractors employees?
Not automatically. Employment status must be considered separately. CIS tax treatment does not by itself determine employment status.
Can construction payroll track labour by project?
Some payroll systems support departments or cost centres, while more detailed job costing may require accounting, ERP or construction-management software.
Should a construction company outsource payroll?
Outsourcing can be worthwhile where weekly payroll, CIS administration, site data or growing workforce complexity consumes significant internal time.
Related Payroll Guides Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
