If you work in the construction industry as a subcontractor and your contractors deduct tax from your payments, there is a very good chance you are owed money back from HMRC. The problem is that most people never claim it, either because they do not realise they are owed a refund or because they find the process confusing.
This guide explains how CIS tax refunds work, how much you might be owed, and exactly what to do to claim it.
Quick Answer
Most CIS subcontractors are owed a tax refund at the end of the year. Your contractor deducts 20% or 30% from your payments, but your actual tax liability is almost always lower once expenses are deducted and your personal allowance is applied. You can claim back the difference by filing a Self Assessment return.
How Does CIS Work?
The Construction Industry Scheme (CIS) is an HMRC system that requires contractors to deduct tax from payments made to subcontractors. These deductions are made at source before you are paid and are sent directly to HMRC on your behalf.
The deduction rates are:
- 20% if you are registered with HMRC under CIS
- 30% if you are not registered
- 0% if you have gross payment status (you must apply for this separately)
These deductions are not the final amount of tax you owe. They are advance payments towards your eventual tax bill. At the end of the tax year, once your actual income, allowable expenses, and personal allowance are taken into account, your real tax liability is calculated, and any overpayment is refunded.
Why Are Most Subcontractors Owed a Refund?
The deduction is calculated on your gross payment, not your profit. It does not account for:
- Your personal allowance (£12,570 per year for most people)
- Business expenses (tools, materials, protective clothing, vehicle costs, phone)
- The fact that you may not have worked a full year
Once these are factored in, your taxable profit is almost always significantly lower than the gross amount your contractor deducted 20% from. The difference between what was deducted and what you actually owe is your refund.
How Much Could I Get Back?
Refund amounts vary depending on your income, expenses, and whether you were registered under CIS at the correct rate. As a rough guide:
| Annual CIS deductions | Typical refund range |
|---|---|
| £2,000 | £800 to £1,400 |
| £4,000 | £1,500 to £2,800 |
| £6,000 | £2,000 to £4,000 |
These are estimates only. The actual figure depends on your circumstances. Subcontractors with significant business expenses, those who were deducted at 30%, and those who did not work for a full year tend to receive larger refunds.
How Far Back Can I Claim?
You can claim a CIS refund for any of the past four tax years. This means if you have been working under CIS and never filed, you could have four years of refunds sitting unclaimed with HMRC.
The four-year window is firm. Once a tax year closes beyond this limit, you lose the right to claim that refund permanently.
What Do I Need to Claim?
To file a Self Assessment return and claim your CIS refund, you will need:
- Your CIS deduction statements (these should have been provided by each contractor)
- A record of your business expenses (tools, fuel, clothing, phone, subcontractor payments you made)
- Your UTR (Unique Taxpayer Reference) number
- Details of any other income in the year
If you have lost your deduction statements, your contractors are legally required to provide them. HMRC also holds records of deductions made, which your agent can access on your behalf.
The Claiming Process
- Register for Self Assessment with HMRC (if you have not already)
- Gather your deduction statements and expense records
- Prepare your Self Assessment return, including all income and allowable expenses
- Submit the return by 31 January following the end of the tax year
- HMRC processes the return and issues the refund, usually within a few weeks
A tax specialist handles all of this for you, including chasing HMRC if the refund is delayed.
What Counts as a Business Expense?
Allowable expenses for CIS subcontractors typically include:
- Tools and equipment (including replacements)
- Work clothing and protective gear
- Fuel and vehicle costs for travelling to sites
- Phone costs (business proportion)
- Materials purchased for jobs
- Public liability insurance
- Accountancy fees
You cannot claim for ordinary commuting from home to a regular workplace. However, most subcontractors travel between sites, which is treated differently and may be claimable.
FAQs
I have never registered for CIS. Can I still claim a refund? Yes. If you were deducted at 30% as an unregistered subcontractor, you can still claim a refund by filing a Self Assessment return. You should also register for CIS to bring your deduction rate down to 20% going forward.
My contractor never gave me deduction statements. What do I do? Contractors are legally required to provide you with a deduction statement for every payment made. If they have not, ask them in writing. If they refuse, HMRC can access the records directly. A tax specialist can request these on your behalf.
Can I claim CIS refunds for previous years? Yes, for up to four tax years. If you have been working under CIS since 2021 and never filed, you could potentially claim refunds for all four years in one go.
How long does HMRC take to pay the refund? Once your return is filed and processed, HMRC typically issues refunds within 4 to 6 weeks. In some cases it can be quicker. If there is a delay, your tax agent can chase HMRC directly.
Do I need an accountant to claim a CIS refund? You can file your own Self Assessment return. However, a specialist will identify every allowable expense, ensure the return is filed correctly, and typically recover significantly more than their fee costs. Most CIS clients find the refund more than covers the cost of using a tax specialist.
Claim What You Are Owed
Our principal tax adviser is an ACCA and ATT qualified tax specialist and HMRC Registered Agent with over 25 years of personal tax experience. Kent Tax Specialists handles CIS refund claims for subcontractors across Gravesend, Dartford, Medway, Maidstone, Canterbury, Tonbridge and the wider Kent area. Get in touch today and we will tell you exactly how much you are likely to get back.
Also see: CIS Refunds in Gravesend | CIS Refunds in Dartford | CIS Refunds in Medway
