Payroll for a construction business isn’t quite like payroll for any other type of small business. The Construction Industry Scheme — CIS — adds a compliance layer that most generic payroll software either handles badly or doesn’t handle at all. If you’re a builder, electrician, plumber, or groundworker who uses subcontractors, CIS needs to be part of your software decision, not an afterthought.
What CIS actually requires
If your business pays subcontractors for construction work, you’re a CIS contractor. That means:
You register with HMRC as a contractor. You verify each new subcontractor with HMRC before paying them — this determines whether you deduct 20%, 30%, or nothing at all from their payment. You deduct the right amount and pay it to HMRC. You file monthly CIS returns by the 19th of each month. You give each subcontractor a payment and deduction statement.
This sits alongside your PAYE payroll if you also have directly employed staff. Most construction businesses are running both: PAYE for employees (labourers, site managers, office staff), and CIS for the subbies. Managing those in separate systems is a compliance risk — things fall through the gap. The best tools handle both in one place.
Moneysoft Payroll Manager
The value leader for small construction businesses. Around £72/year for a single employer, no per-employee or per-subcontractor charges. Moneysoft handles subcontractor verification, monthly CIS returns, and payment/deduction statements alongside full PAYE payroll — in the same product. For a small building firm with a mix of employed staff and regular subcontractors, it covers more ground than tools costing several times as much.
The interface requires learning and won’t be winning design awards. It’s also a Windows desktop application — runs on one machine, no cloud access. For a sole trader or small operator running their own books from one computer, that’s fine. For anyone who needs remote access or shared access between two people in different locations, it’s a problem.
BrightPay
Also handles CIS alongside PAYE, with clean subcontractor management and a guided monthly return process. Priced at around £149/year on the annual licence. BrightPay’s desktop version is being discontinued after the 2025/26 tax year — the product is moving to a cloud model (BrightPay Cloud) at higher pricing. Worth checking current cloud pricing before committing.
For businesses that want more polish than Moneysoft and can stomach a higher price, BrightPay is a solid alternative. For businesses choosing between the two primarily on cost, Moneysoft wins.
Sage 50 Payroll
The step up that larger construction businesses eventually consider. Comprehensive CIS handling, strong integration with Sage Accounts, and a well-established support infrastructure. Also significantly more expensive than either of the options above.
For a small construction firm — a handful of direct employees and a few regular subcontractors — it’s probably more than you need. For a business with twenty-plus workers across multiple sites, it starts to make more sense.
Xero Payroll
Xero has built-in CIS functionality and its PAYE payroll is solid. The honest assessment from businesses that use it for CIS: it handles straightforward scenarios well and gets more difficult on complex ones. If you’re already on Xero for accounting and want to keep everything in one place, it’s worth evaluating. If CIS accuracy and the monthly return process are your primary concern, the dedicated payroll tools above handle it more reliably.
A few things that catch people out
Subcontractor verification. Verification must happen before you pay a new subcontractor — not after. Software that does this directly through HMRC within the platform is much harder to let slip than one that requires a manual verification step. Check how each tool handles this.
Gross payment status. Some subcontractors are registered for gross payment, meaning no deduction. Your software needs to apply the right rate automatically from the verification result, not require you to remember which subbies are gross and which aren’t.
PAYE and CIS in separate systems. Manageable when you’re small. Increasingly risky as the number of workers grows. Both compliance obligations have their own deadlines, their own HMRC submissions, their own penalties for errors.
If you only use subcontractors
Some small construction businesses have no direct employees at all — only subcontractors. In that case, you don’t need payroll software. You need CIS management, which some construction-specific accounting tools handle without a dedicated payroll product. Worth talking to an accountant who works with construction businesses before you set anything up — the right configuration looks different depending on how you operate.
CIS carries real penalties: late monthly returns, wrong deduction rates, unverified subcontractors. If you’re new to contracting or have recently started using subcontractors, get the setup right with an accountant before you start deducting. It’s considerably easier than fixing it later.
For the broader market comparison, see our guide to the best payroll software for UK small businesses. Moneysoft’s value case for construction businesses in particular is covered in the cheapest payroll software guide.
