If you work as a subcontractor under the Construction Industry Scheme, your contractor deducts either 20% or 30% from your labour payments before you receive them. These deductions are not a final tax. They are payments on account toward your annual tax bill.
In many cases, especially if you have allowable business expenses or your income was lower than expected, more CIS tax is deducted than you actually owe. When that happens, HMRC owes you a refund.
This guide explains exactly how to claim that refund, whether you are a sole trader or a limited company.
Who Can Claim a CIS Tax Refund?
You may be entitled to a CIS refund if:
- You are a subcontractor and your CIS deductions exceed your actual Income Tax and National Insurance liability for the year
- You have allowable business expenses that reduce your taxable profit below the amount that was deducted
- Your total income for the year was lower than expected, putting you in a lower tax band
- You had periods of low or no work during the tax year
The average CIS refund for a sole trader subcontractor in the UK is between £1,000 and £3,000 per year, depending on income level and expenses. Many subcontractors leave this money unclaimed simply because they do not know the process.
How Sole Traders Claim a CIS Refund
If you are self-employed as a sole trader, you claim your CIS refund through your annual Self Assessment tax return.
Step 1. Register for Self Assessment. If you are not already registered, notify HMRC that you are self-employed and need to file a Self Assessment return. You must do this by 5 October following the end of the tax year in which you started working under CIS.
Step 2. Collect your CIS deduction statements. Your contractor must give you a deduction statement each time they pay you. This shows how much was paid and how much was deducted. Keep every statement. You need them to complete your return accurately.
Step 3. Complete your Self Assessment return. Report your total CIS income, your allowable business expenses, and enter the total CIS deductions made in the CIS box on the return. HMRC calculates your actual tax liability and offsets the deductions against it.
Step 4. HMRC issues the refund. If your deductions exceed your liability, HMRC refunds the difference. Refunds are usually paid within a few weeks of a submitted return if filed online. HMRC pays into your bank account if you provide details on the return.
How Limited Companies Claim a CIS Refund
If you operate through a limited company as a subcontractor, the process is different. CIS deductions made to your company are offset against the company’s PAYE liability, not through Self Assessment.
Here is how it works:
- The company’s CIS deductions are recorded in the Employer Payment Summary (EPS) submitted to HMRC each month through your payroll software
- The CIS deductions are set off against the PAYE and National Insurance the company owes to HMRC
- If the CIS deductions exceed the PAYE and NI owed, the company can apply to HMRC for a repayment of the difference
This offset must be claimed through your payroll submissions. If your company is not running payroll correctly or not submitting an EPS each month, you may be missing CIS refunds you are entitled to.
| Important A limited company cannot claim CIS refunds through Self Assessment. The refund mechanism for companies runs entirely through PAYE and the Employer Payment Summary process. If your accountant or payroll provider is not handling this correctly, contact HMRC or speak to an accountant who specialises in CIS. |
What Expenses Can Subcontractors Claim to Increase Their Refund?
The more allowable expenses you claim, the lower your taxable profit, and the larger your potential refund. Common allowable expenses for CIS subcontractors include:
| Expense | Notes |
| Tools and equipment | Purchase or repair of tools used for work |
| Vehicle costs | Fuel, insurance, and servicing for a vehicle used for work (proportion of business use only) |
| Protective clothing | Safety boots, hi-vis vests, hard hats — not ordinary clothing |
| Phone and communication | Business portion of your phone bill |
| Public liability insurance | Premiums for cover required for your work |
| Accountancy fees | Cost of having your tax return prepared |
| Training and certification | Courses directly related to your trade |
| Materials you supply | Only if not already excluded from CIS deductions on your invoices |
You cannot claim everyday clothing, personal food and drink, or any expense that is not wholly and exclusively for your work.
CIS Refund Deadlines
You can claim a CIS refund going back up to four tax years. That means if you have not filed returns for previous years, you may still be able to reclaim deductions from those years.
| Tax Year | Claim Deadline |
| 2023/24 | 31 January 2029 |
| 2022/23 | 31 January 2028 |
| 2021/22 | 31 January 2027 |
| 2020/21 | 31 January 2026 |
If you have missed filing Self Assessment returns for previous years, HMRC may have issued penalties. An accountant can often negotiate these down when you come forward voluntarily and file the outstanding returns.
How Long Does a CIS Refund Take?
If you file your Self Assessment return online and provide your bank details, HMRC typically processes CIS refunds within two to four weeks. Paper returns take longer, usually six to eight weeks.
HMRC may delay a refund if your return is selected for a compliance check, if there are discrepancies between your return and the information submitted by your contractors, or if you have outstanding tax debts that HMRC offsets against the refund.
Frequently Asked Questions
Can I claim a CIS refund if I have not filed a Self Assessment return?
No. The refund is only issued after HMRC has processed your Self Assessment return and calculated that more was deducted than you owe. You must file the return to trigger the refund, even if it is late.
What if my contractor did not give me deduction statements?
Your contractor is legally required to give you a CIS deduction statement each time they pay you. If they have not, ask them in writing. If they refuse, you can report them to HMRC. You can also ask HMRC to provide details of deductions reported under your UTR number.
Can I claim CIS refunds for previous years?
Yes. You can claim refunds for up to four previous tax years by filing outstanding Self Assessment returns. Be aware that late filing penalties may apply, but these can sometimes be reduced when you approach HMRC proactively.
How do I know how much CIS was deducted from my payments?
Your contractor provides a deduction statement with each payment. If you have lost these, you can ask your contractor for copies or contact HMRC, who can provide a summary of deductions reported under your Unique Taxpayer Reference (UTR).
Does being on gross payment status affect my refund?
If you hold gross payment status, no CIS deductions are made from your payments. You pay your own tax through Self Assessment at the end of the year. There are no CIS deductions to claim back, but you may still receive a refund if your actual tax liability is lower than any payments on account you made during the year.
Need Help Claiming Your CIS Refund?
M&B Tax Services helps CIS subcontractors and limited companies claim back overpaid deductions. We handle Self Assessment returns, CIS statements, and PAYE offset claims for construction businesses across the UK.
We are ICB-regulated accountants based in Rugby. If you think you are owed a CIS refund from this year or previous years, we can work out exactly what you are entitled to.
Book a free 30-minute call and we will review your CIS position at no cost.
Joanna Bruty
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