CIS tax refunds for subcontractors

If contractors take tax off your invoices under the Construction Industry Scheme, there's a good chance some of it is due back. Here's how it works.

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Updated 15 October 2026 · For England, Wales and Northern Ireland

Written by Owen Nelson, Partner at Nelson Shepherd

How CIS deductions work

Under the Construction Industry Scheme, contractors take tax off the labour part of your invoices and pay it to HMRC for you:

  • 20% if you're registered for CIS,
  • 30% if you're not registered, and
  • nothing if you have gross payment status.

The deduction is taken from your labour before your expenses and your tax-free personal allowance are counted. That's why many subcontractors pay too much over the year.

Why you might be owed money

Example: you earn £32,000 for labour and contractors deduct 20%, which is £6,400. You spend £6,500 on your van, tools, workwear and insurance. Your profit is £25,500, and the tax and National Insurance on that is about £3,362. You could be due back roughly £3,038. Try your own figures in our CIS refund estimator.

How to claim a CIS tax refund

If you're a sole trader

You claim through your self assessment tax return. You can file from 6 April, as soon as the tax year ends, so there's no need to wait until January. HMRC normally pays the refund once the return has been processed and checked.

If you run a limited company

The company offsets the CIS deducted against what it owes HMRC for PAYE through its payroll reporting each month. Anything left over can be reclaimed after the end of the tax year.

What you need to claim a CIS refund

  • Your Unique Taxpayer Reference (UTR) and your HMRC online account login.
  • Every monthly payment and deduction statement from your contractors for the tax year, 6 April to 5 April.
  • Records and receipts for your business expenses.
  • Your bank details, so HMRC can pay the refund straight into your account.
  • For a limited company: the CIS deductions recorded in your payroll and claimed each month on the Employer Payment Summary (EPS).

Check each statement against your bank as it arrives. Chasing a missing statement in May is much easier than in January.

Expenses that usually count

Costs must be wholly for your business. Common ones include:

  • tools and equipment,
  • van costs, or business mileage if you use your own vehicle,
  • protective clothing and safety boots (not everyday clothes),
  • the business part of your phone bill,
  • public liability and van insurance,
  • training and trade cards related to your work,
  • accountancy fees.

Travel from home to a single permanent workplace usually doesn't count, but travel to temporary sites often does. Keep receipts for everything.

Gross payment status: no deductions at all

If your business passes HMRC's business, turnover and compliance tests, you can apply for gross payment status. Contractors then pay you in full, without taking tax off, so there's no refund to wait for. You pay your tax through your return instead. Late returns or late payments can cost you the status, so keeping everything on time matters.

What to watch out for

  • Keep your monthly statements. Contractors must give you a payment and deduction statement each month. Check they match your bank.
  • Missing deductions slow down your refund. We can chase contractors for missing statements.
  • Be wary of refund firms that take a large percentage of your refund or ask you to sign over the payment.
  • Register for CIS if you haven't. Unregistered subcontractors lose 30% instead of 20%.

Common questions

How do I claim a CIS tax refund?

Sole traders claim through their self assessment tax return, which you can file from 6 April after the tax year ends. Limited companies offset CIS deductions against their PAYE bill through payroll, and can reclaim anything left over after the tax year.

How long does a CIS tax refund take?

There's no fixed time. HMRC pays once it has processed your return and matched your deductions against what your contractors reported. Missing or mismatched payment statements are the most common cause of delay.

Can a limited company claim a CIS refund?

Yes, but not through a personal tax return. The company sets CIS deductions against what it owes for PAYE and National Insurance each month, and can claim back any balance after the end of the tax year.

Why is my CIS refund delayed?

Usually because deductions on your return don't match what contractors reported, a statement is missing, or HMRC is carrying out checks. Keep every monthly statement and check it against your bank.

How we can help

We check every statement, claim all the expenses you're entitled to, file early, and tell you what refund to expect before we submit. Book a free review call to get started.

Source: GOV.UK, Construction Industry Scheme. General information only, not advice for your situation.