How to claim a CIS tax refund: a step-by-step guide for subcontractors

Under the Construction Industry Scheme (CIS), contractors take tax off payments to subcontractors and pass it to HMRC. If you are registered, they deduct 20%. If you are not registered, they deduct 30%. The deduction comes off the labour part of each payment, not the materials.

These deductions are advance payments towards your income tax and National Insurance. The problem is that 20% is taken from your labour regardless of your business costs or your tax-free Personal Allowance of £12,570. Your real tax bill is worked out on your profit, after expenses and after that allowance. So many subcontractors pay far more through CIS than they actually owe, and the difference is your CIS tax refund.

Say you are a self-employed subcontractor in England in 2026/27 with no other income. Contractors pay you £30,000 for labour and deduct 20%. Your business expenses (tools, van costs, protective clothing and so on) come to £5,000.

Class 2 National Insurance is no longer compulsory. Because the profit is over £7,105, Class 2 is treated as paid, so you still get the State Pension credit without paying anything extra.

With higher costs the refund can be the whole amount deducted. Say your labour is £20,000, CIS takes £4,000 and your expenses are £9,000. Your profit is £11,000, which is below the £12,570 Personal Allowance. No income tax or Class 4 is due, so the full £4,000 comes back.

• Your CIS statements. Contractors should give you a statement for each month they take deductions, showing the gross amount, materials and tax deducted. These prove what has already been paid.
• A record of all your income from construction work, including any jobs paid without deductions.
• Expense records. Receipts, invoices and bank statements for tools, materials you bought, van and fuel or mileage, phone, protective clothing and accountancy fees.
• Your UTR and Government Gateway details (your Unique Taxpayer Reference is the 10-digit number HMRC gives you when you register for Self Assessment).
• Bank details for the refund to be paid into.

If you are self-employed, there is no separate refund form. You claim back overpaid deductions through your Self Assessment tax return.

1. 1

   Wait for the tax year to end

   The tax year runs from 6 April to 5 April. You can file your return for 2025/26 from 6 April 2026, and for 2026/27 from 6 April 2027.

2. 2

   Match your statements to your income

   Total the gross payments, materials and deductions on every CIS statement and check they agree with your own records.

3. 3

   Work out your expenses

   Add up all allowable business costs for the year so your profit is correct.

4. 4

   File the return online

   Enter your income, your total CIS deductions and your expenses in the self-employment pages. The return calculates the tax due and shows the overpayment.

5. 5

   Receive the refund

   HMRC checks the deductions against what your contractors reported and then repays you. The refund comes after you file, so filing early means getting paid early.

A limited company does not use Self Assessment for this. Instead it reclaims deductions suffered in two ways:

• Offset during the year. The company reports the CIS deductions taken from its income on the Employer Payment Summary (EPS) it sends through payroll. These are set against the PAYE, National Insurance and any CIS deductions the company itself owes HMRC, so it pays less each month.
• Repayment after the tax year. If deductions are more than the company owes, it can claim a repayment from HMRC after the tax year ends.

This only works if the company runs a PAYE scheme and reports correctly every month. Our payroll, PAYE and CIS service handles the EPS claims for you.

• Missing statements. Ask the contractor for any you do not have. HMRC checks your claim against contractors' returns, so gaps can delay your refund while it investigates.
• Figures that do not match. If your total deductions differ from what contractors reported, HMRC may hold the repayment until it is resolved.
• Forgetting expenses. Every allowable cost you leave out increases your profit and reduces your refund.
• Mixing up labour and materials. Deductions only apply to labour. Materials you supplied should be shown separately on your invoices and statements.
• Not registering for CIS. Unregistered subcontractors suffer 30% instead of 20%. You can still claim the overpayment back, but you wait longer for more of your money.
• Leaving it until January. Filing at the deadline means waiting the longest for money that is already yours.

Yes. HMRC allows claims for overpaid tax for up to 4 years after the end of the tax year concerned. If you never filed returns for earlier years when CIS was deducted, you may still be able to file them and recover the overpayment. For example, the deadline to claim for 2022/23 (which ended on 5 April 2023) is 5 April 2027.

We work with builders and CIS subcontractors every tax year. Through our CIS tax refunds service we gather and check your statements, chase missing ones, make sure every allowable expense is claimed, file your return as early as possible and deal with HMRC if the refund is held up. For companies, we look after the monthly EPS offsets.

Our fees are fixed and monthly, from £99 for self-employed people, so you know the cost before we start. Book a free 20-minute chat and we will confirm your price in writing within one working day.