CIS tax returns and refunds for subcontractors
If you work as a subcontractor under the Construction Industry Scheme, contractors deduct 20% from your payments if you are registered and they can verify you. At the end of the tax year your Self Assessment return sets those deductions against the tax you actually owe, and if too much was taken HMRC repays the difference. IB&Co Accountants prepares CIS tax returns and claims the allowable expenses you are entitled to.
How does CIS work for subcontractors?
Under CIS, a contractor must deduct money from your payments and pass it to HMRC as an advance towards your tax and National Insurance. The rate depends on your status:
- 20% if you are registered for CIS and the contractor can verify you
- 30% if you are not registered, or the contractor cannot verify you
- No deduction if you have gross payment status, in which case you pay all your tax yourself at the end of the year
If you are not registered, an extra 10% is deducted from every payment, and you only get it back through your tax return after the year end. Registering is simple: if you do not yet have a Unique Taxpayer Reference, you register as a new business for Self Assessment and choose “working as a subcontractor”, which registers you for Self Assessment and CIS at the same time.
Why might a CIS subcontractor be due a refund?
Because the 20% deduction is taken from your gross pay (less materials), before your expenses and personal allowance are taken into account. Once your return shows your allowable expenses and your Personal Allowance, the tax you actually owe is often lower than what was deducted. HMRC then pays back the difference.
A refund is not guaranteed. If your profits are high, or you have other income, you may still owe tax. That is why it matters to get the figures right rather than estimate.
What is not taxed under CIS deductions?
Contractors should not take CIS deductions from the parts of your invoice that cover:
- VAT
- materials you paid for directly
- plant hired for the job
- consumable stores (equipment that is now unusable)
- manufacturing or prefabricating materials
Keep receipts for materials, because the contractor may ask for evidence and will estimate the cost if you have none. Check every payment and deduction statement to make sure materials were left out.
What can I claim on my CIS tax return?
Allowable expenses are costs incurred wholly and exclusively for your work. For subcontractors these commonly include:
- tools and equipment, and protective clothing and boots
- van or vehicle costs for business journeys, including travel to temporary sites
- phone and internet used for work
- public liability insurance and trade body fees
- accountancy fees and training related to your business
- materials you bought that were not already reimbursed
Personal costs, such as everyday clothing or travel to a permanent workplace, are not allowable. We go through your year with you so nothing allowable is missed and nothing doubtful is claimed.
How do I claim back CIS deductions?
Sole traders and partners. At the end of the tax year you file a Self Assessment return showing your total pay before deductions as income and the total deductions as “CIS deductions”. HMRC works out what you owe, takes off the deductions and repays any overpayment. If you still owe tax, it is due by 31 January after the tax year. You need the monthly payment and deduction statements each contractor must give you.
Limited companies. A company does not reclaim deductions through Self Assessment. It sets them against what it owes through its payroll scheme using an Employer Payment Summary, and claims a refund if deductions are left over after the end of the tax year. It must not use its Corporation Tax return to reclaim CIS deductions, as HMRC may charge a penalty.
If you stop trading. You may be able to claim back deductions for the current tax year without waiting for the year end.
What is the deadline for a CIS tax return?
The same as any Self Assessment return: 31 January after the end of the tax year for online returns. You can file from 6 April, and filing early means any refund arrives sooner. Missing the deadline means late filing penalties; see our late tax returns page.
Can I get gross payment status?
Gross payment status means contractors pay you in full and you pay your tax at the end of the year. HMRC looks at your turnover for the last 12 months, ignoring VAT and materials. As a sole trader it must be at least £30,000. You must also show HMRC that you have paid your tax and National Insurance on time in the past, that your business does construction work in the UK and that it is run through a bank account. HMRC reviews your status every year, and you need to keep your tax returns and payments on time to keep it. It improves cash flow, but you then need to set money aside for your tax bill. We help you decide whether it is right for you.
How IB&Co helps CIS subcontractors
- register you for CIS and Self Assessment, so contractors can deduct at 20% rather than 30% once they verify you
- collect and check your payment and deduction statements
- claim the allowable expenses you are entitled to
- prepare and file your Self Assessment return as your agent
- chase repayments and deal with HMRC queries
- advise on gross payment status and whether a limited company would suit you
One builder told us: “I no longer stress about my tax return or self assessment, as they take care of it all for me” (testimonials). If you are a contractor who pays subcontractors, see our CIS Returns & Subcontractor Verification service instead.
Frequently asked questions
20% if you are registered and the contractor can verify you, 30% if you are not registered, and nothing if you have gross payment status.
Sole traders file a Self Assessment return showing gross pay, allowable expenses and CIS deductions. If the deductions are more than the tax you owe, HMRC repays the difference.
After the end of the tax year on 5 April, when you file your return. You can file from 6 April, so filing early gets any refund to you sooner.
Costs incurred wholly and exclusively for your work, such as tools, protective clothing, business vehicle costs, work phone, insurance and accountancy fees. Personal costs are not allowable.
As a sole trader, at least £30,000 in the last 12 months, ignoring VAT and materials. You also need to have paid your tax and National Insurance on time, do construction work in the UK and run the business through a bank account.
After a Discovery Call we send you a written proposal with a fixed fee before any work starts.
Get your CIS return done properly
Book a Discovery Call and bring your payment and deduction statements.
Call 020 7164 0225 or visit us at Level 37, 1 Canada Square, Canary Wharf, London E14 5AA. Open Monday to Friday 9:00 to 18:30 and Saturday 10:30 to 16:30.
Checked on 11 November 2026. This page is general information based on HMRC guidance at that date, and is not advice for your circumstances.
