CIS Tax Refund: How to Reclaim Tax Deducted by Contractors

Why a refund happens

CIS deductions are made on the full payment before your expenses and personal allowance, so deductions often exceed the tax you actually owe. This is why subcontractors with tools, materials and vehicle costs often get money back: the tax was deducted from gross pay, but the real bill is based on profit after expenses.

What you need

Monthly CIS statements from each contractor, a record of income and a record of expenses such as tools, materials, vehicle and insurance. Each statement shows the contractor’s name, your UTR and how much tax was deducted that month. Without them, proving the deductions is much harder.

How to claim

File your Self Assessment return, entering CIS deductions in the construction section. HMRC calculates the refund and pays it by bank transfer, usually within a few weeks.

Registering for gross payment

If you meet the compliance tests you can apply to be paid gross, which improves cash flow and avoids deductions. You must pass HMRC’s business, compliance and turnover tests. If you qualify, no tax is deducted and you pay through Self Assessment instead — better for cash flow, though it does not reduce the tax you owe.

How CIS deductions turn into a refund

Under the Construction Industry Scheme, a contractor deducts tax from your payments for labour and passes it to HMRC on your behalf. The standard deduction is 20% if you are registered with the scheme, 30% if you are not, and 0% if you hold gross payment status. These deductions are treated as payments on account of your income tax and National Insurance, not as your final bill. When you file your Self Assessment return, HMRC works out your actual liability based on your profit after expenses. If the amount deducted by contractors is more than the tax you owe, you get the difference back.

Refunds are common because the deduction is calculated on your gross labour payments, not on your profit. Subcontractors often have significant costs, such as tools, work clothing, vehicle costs and insurance, which reduce the profit that is actually taxed. A subcontractor with modest profit and a Personal Allowance of £12,570 can easily have paid far more through CIS than they owe. Our explanation of CIS deductions at 20%, 30% and 0% shows how each rate works.

Worked example: a registered subcontractor

This is an illustrative example for 2025/26 using England rates. A registered subcontractor invoices £30,000 for labour in the tax year, and contractors deduct 20%. Business expenses are £8,000.

The same person with no expenses recorded would have profit of £30,000, taxable income of £17,430, tax of £3,486 and Class 4 NI of £1,045.80, a total of £4,531.80 and a refund of only £1,468.20. That difference of £2,080 is why good records of allowable costs matter. See our guide to CIS expenses subcontractors can claim for ideas.

What if I was taxed at 30%?

If you were not registered with CIS when you started, contractors must deduct 30%, so your overpayment can be even larger. Registering promptly as a subcontractor reduces the deduction going forward, and any excess already deducted can normally be reclaimed through your return. Our CIS registration guide explains how to register, and our page on applying for gross payment status covers how to stop deductions altogether if you qualify.

Common mistakes

• Not keeping the monthly CIS statements from contractors, so the total tax deducted cannot be proved.
• Filing late and delaying the refund. A late return can also trigger a £100 penalty even if you are owed money, depending on the circumstances, so check current HMRC guidance.
• Failing to claim allowable expenses, which are the main reason refunds are smaller than they should be.
• Entering the gross amount and the deducted amount the wrong way round.
• Assuming the refund will arrive automatically without filing a return.

Practical checklist

1. Collect every CIS statement and cross-check totals to your bank receipts.
2. List all work costs, with receipts and mileage records.
3. Check your Unique Taxpayer Reference and Government Gateway access.
4. File your return as soon as the tax year ends on 5 April.
5. Make sure your bank details are correct so the repayment can reach you.

Builders and tradespeople may also find our builder and tradesperson tax return guide helpful.

How SATR can help

We prepare and file CIS returns online for a fixed fee from £199 + VAT, using qualified UK accountants. Our CIS Self Assessment service is designed to make sure you recover every pound you are owed.

This article is general information, not personal tax advice.

Timing and cash flow for subcontractors

A CIS refund is a repayment of your own money, so it makes sense to claim it promptly. There is no need to wait for the 31 January deadline: you can file your return for a tax year at any point after it ends on 5 April, and many subcontractors who expect a repayment file in the spring or early summer. Doing so also means your bill, or refund, is known well before the January payment date. If you instead owe a balance because you had few expenses or other income, early filing still lets you plan and spread the cost.

It also helps to review your records during the year rather than at the end. Compare each month’s CIS statement to your own invoice records, so that missing or incorrect deductions can be queried with the contractor while the work is still fresh. Where a contractor has deducted tax but not reported it properly, you may need HMRC’s help to sort out the position, so keep copies of all your invoices and bank receipts.

Frequently asked questions

How long does a CIS refund take?

Usually within a few weeks of filing, but it can take longer if HMRC runs checks on the CIS deductions or your expenses. Filing early in the tax year and keeping your CIS statements speeds things up.

Can I claim for past years?

Yes. You can generally reclaim within four years of the end of the tax year, through overpayment relief or by amending a return still in time. Older years are usually closed, so do not delay.

Can I claim a CIS refund before the tax year ends?

Mid-year repayment claims may be possible for some subcontractors in certain situations, but most people claim after filing their return. Check current HMRC guidance for the conditions.

Are materials included in the CIS deduction?

The deduction is normally taken from the labour element only, not the cost of materials you paid for, so your invoices should show these separately.

Do I still have to file if all my tax was deducted?

Often yes. Filing is how HMRC reconciles the deductions with your actual liability and issues any refund, so most subcontractors need a return. Without a return there is no refund.

The Bottom Line

If you are a subcontractor with CIS deductions and allowable expenses, filing your Self Assessment is usually how you reclaim the excess. Keep every CIS statement, claim all legitimate costs and file as soon as the tax year ends on 5 April to get your money back sooner.

SATR prepares and files CIS returns for a fixed fee from £199 + VAT — done online by qualified UK accountants. Order online now or see our CIS contractor tax returns service.