Why CIS subcontractors overpay tax, how to work out your refund, and how to get it back faster. Worked example, expenses list and realistic timescales.
A Guide to CIS Tax Returns and Claiming Your CIS Refund
October 5, 2026
|
CIS Tax Returns and Claiming Your CIS Refund
Quick Summary: Most CIS subcontractors are owed money by HMRC, and most of them wait ten months longer than they need to before getting it. This guide covers what actually determines the size and speed of your refund: why the 20% deduction almost always overshoots your real liability, how to calculate what you are owed with a full worked example, which expenses genuinely increase the refund and by how much per pound claimed, why filing on 6 April rather than 31 January matters more than anything else in this guide, what realistically delays a repayment once it is submitted, how far back you can go for earlier years, and what a percentage-based refund company costs compared with a fixed fee.
Why Subcontractors Almost Always Overpay
The Construction Industry Scheme deducts 20% from your labour payments before you receive them. That deduction is applied the same way to everyone, every month, with no regard whatsoever for two things that heavily affect what you actually owe.
It ignores your personal allowance: The first £12,570 of your profit is tax free. CIS takes 20% from the first pound of labour you invoice.
It ignores your expenses: Your tax is calculated on profit, not turnover. Tools, van costs, insurance, protective equipment and everything else comes off before tax is worked out. CIS deducts from the gross labour figure before any of it.
The result is structural rather than accidental. For a typical subcontractor working all year with ordinary business costs, the amount deducted will exceed the amount owed, usually by thousands of pounds. The Self Assessment return is where that gets reconciled, and the difference is your refund.
If you are on the 30% rate because you never registered as a subcontractor, the overpayment is still larger. Registering is free and takes minutes, and it drops the rate by ten percentage points from the next payment onwards.
How Your Refund Is Actually Calculated
There is no separate refund application for sole traders. The tax return itself produces the figure. Here is the full calculation for a realistic year.
A registered subcontractor in 2025/26:
|
Step |
Figure |
|
Labour invoiced across the year |
£38,000 |
|
CIS deducted at 20% |
£7,600 |
|
Allowable business expenses |
£8,000 |
|
Taxable profit (£38,000 − £8,000) |
£30,000 |
Now the actual liability on that profit:
|
Calculation |
Figure |
|
Profit |
£30,000 |
|
Less personal allowance |
(£12,570) |
|
Taxable at 20% |
£17,430 |
|
Income tax (£17,430 × 20%) |
£3,486 |
|
Class 4 National Insurance (£17,430 × 6%) |
£1,045.80 |
|
Total tax and NIC due |
£4,531.80 |
The £3,068 was never tax. It was your money, collected in advance because the scheme has no way of knowing your allowance or your costs until you tell HMRC what they were.
To estimate your own position, the method is the same: add up your CIS deductions for the year, work out your profit after expenses, deduct £12,570, apply 20% plus 6%, and compare the two numbers.
A note on Class 2 National Insurance: the liability to pay it was removed from the 2024/25 tax year onwards, so it no longer forms part of this calculation. Voluntary contributions remain available for those with profits below the Small Profits Threshold.
The Expenses That Decide the Size of Your Refund
This is where most of the variation sits. For a basic-rate subcontractor, every £100 of legitimate expense you claim adds £26 to your refund, 20% income tax plus 6% Class 4 National Insurance. Miss £2,000 of genuine costs and you have left £520 with HMRC.
|
Commonly claimable |
Not claimable |
|
Tools, equipment and small plant |
Ordinary clothes worn to site |
|
Protective clothing, safety boots, hi-vis |
Food on an ordinary working day |
|
Van and vehicle running costs, or mileage |
Fines and parking penalties |
|
Public liability and tool insurance |
Travel between home and a permanent workplace |
|
Materials you paid for yourself |
Training for a completely new trade |
|
Accountancy and bookkeeping fees |
Personal use portions of anything |
|
Mobile phone, business proportion |
Entertaining |
|
Site parking, tolls and congestion charges |
— |
|
Trade body subscriptions and CSCS card renewal |
— |
|
Training that updates skills you already have |
— |
|
Use of home for paperwork and quoting |
— |
Travel is the big one for subcontractors. Journeys to a temporary workplace are claimable, and for someone moving between sites most sites are temporary. This is routinely under-claimed, and over a year of driving to different jobs it is often the single largest expense on the return.
You can claim mileage at the approved rates rather than tracking every running cost, which is simpler and usually produces a similar or better result for a van doing ordinary site mileage.
Claim what you genuinely spent and keep the evidence. Inflating expenses to increase a refund is the fastest way to turn a routine repayment into an enquiry.
What You Need Before You File
|
Item |
Why |
|
Your UTR |
Required to file at all |
|
Payment and deduction statements |
Your evidence for every CIS deduction claimed |
|
Invoices or records of everything you billed |
To establish turnover |
|
Expense receipts and records |
To establish profit |
|
Mileage log or vehicle running costs |
Usually the largest expense |
|
Bank details |
HMRC pays the refund directly |
Payment and deduction statements matter more than anything else on that list. Contractors must issue one to every subcontractor they deduct from, within 14 days of the end of each tax month. They are the proof that the deductions you are claiming actually happened.
If you are missing some, ask the contractor first — they are legally required to provide them. HMRC can cross-check your claim against the monthly CIS300 returns the contractor filed, so the figures need to line up. Invoices and bank statements showing gross and net amounts can support a claim where statements are genuinely unobtainable, but they are weaker evidence and more likely to trigger a check.
Filing Early Rather Than in January
This is the most valuable point in this guide and the one most subcontractors ignore.
The tax year ends on 5 April. You can file your return from 6 April, the very next day. The deadline is 31 January the following year. Those are not the same thing, and the gap between them is nearly ten months.
|
If you file |
Refund typically reaches you |
Your money is sitting with HMRC for |
|
Early April |
Late April or May |
A few weeks |
|
September |
October |
Around six months |
|
31 January |
February, during the busiest period |
Almost ten months |
The deadline matters when you owe money, because paying early gains you nothing. When HMRC owes you money, the deadline is irrelevant and the filing date is everything.
There is a second advantage. HMRC’s repayment queue is at its longest in January and February because the entire Self Assessment population files at once. A return submitted in April is processed outside that peak.
HMRC only pays repayment interest if a refund is still outstanding after 31 January following the tax year, so for anyone filing in good time there is no compensation for the delay. Waiting simply costs you the use of your own money.
How Long It Takes, and What Delays It
For a clean online Self Assessment claim, a refund commonly reaches the bank account within two to four weeks of the return being processed. Many are faster. Some take considerably longer.
What pushes a refund into the slow lane:
A security check. HMRC pulls a proportion of repayment claims for verification. If it writes to you, reply promptly — an unanswered letter can result in the claim being closed.
Figures that do not match the contractor’s returns. If you claim deductions HMRC cannot see on the CIS300 returns filed against your UTR, the repayment is held while it is investigated. This is the most common cause of delay and it usually traces back to a contractor who filed late or recorded the wrong UTR.
Other tax owed. HMRC offsets a repayment against anything else outstanding on your record before paying the balance.
Missing or incorrect bank details. Straightforward to avoid and surprisingly common.
Filing at the peak. January and February are the slowest months of the year for repayments.
You can check progress in the Self Assessment section of your HMRC online account or the HMRC app, which shows whether a repayment has been authorised or is still pending.
Claiming for Previous Years
If you have not filed for earlier years, the money is probably still recoverable. You can generally claim back four years from the end of the tax year the deductions relate to.
In practice, during 2026/27 that means you can still claim for 2022/23, with the window closing on 5 April 2027. Each year is a separate return and a separate calculation.
If you have unfiled returns for past years, filing them may well produce refunds rather than bills — but late filing penalties can apply to those returns independently of whether tax was owed, so it is worth understanding both sides before you start.
In-Year Claims If You Have Stopped Working
From 1 February 2026 the fee is £50 to file online and £110 by post.a
Normally you wait until the tax year ends. There is one exception.
If you have ceased construction work part way through the year and your accounting period has ended, you can claim a repayment of CIS deductions during the tax year rather than waiting. Individuals use form CIS40 and partners use form CIS41.
The conditions are strict. The accounting period determining your profit for the year must have ended, your tax affairs must be up to date, and the claim cannot be made after the end of the tax year the deductions were made in. After that point you are back to the normal Self Assessment route.
This is genuinely useful for anyone who has stopped trading, left the industry, or moved into employment mid-year, and it is almost never mentioned.
The fee covers a 12-month payment period rather than a single filing, so if you file an additional statement within that period to update details, you do not pay again.
Filing late costs exactly the same as filing on time. There is no surcharge. That is worth knowing if you are already overdue and hesitating, the only thing delay adds is risk.
Limited Companies Claim a Different Way
If you trade through a limited company, none of the Self Assessment route above applies to the company’s CIS deductions.
A company offsets CIS deductions suffered against its own PAYE, National Insurance and CIS liabilities, reported monthly through an Employer Payment Summary. Where deductions exceed those liabilities, the balance carries forward through the tax year and any remaining amount can be reclaimed after the year end.
Company claims are slower. HMRC’s published expectation for these is a response within around eight weeks, considerably longer than a typical sole trader repayment.
Directors of such companies still file personal Self Assessment returns, but the company’s CIS deductions belong to the company and cannot be claimed on the director’s own return. Mixing the two is a common and time-consuming error.
What a Refund Company Costs You
A number of firms advertise CIS refunds on a no-win-no-fee basis, typically charging a percentage of whatever comes back. Rates vary, commonly in the region of 25% to 40%.
On the £3,068 refund in the worked example above, a 30% fee is £920.
The arithmetic is worth doing before you sign anything, because the underlying work is the same either way: a Self Assessment return gets filed and HMRC repays the difference. A percentage fee scales with your refund; a fixed fee does not. The larger your refund, the bigger that gap becomes.
Check also who the refund is paid to. Some arrangements route the repayment through the firm’s own account before the balance reaches you, which adds a step and sometimes a delay.
Mistakes That Shrink or Delay Your Refund
Waiting until January. Ten months of your own money sitting with HMRC for no reason.
Not chasing missing deduction statements. Without them, deductions are hard to evidence and the claim is likely to be checked.
Under-claiming travel. Journeys to temporary sites are claimable and this is the most commonly missed expense in the trade.
Declaring net income instead of gross. Report what you invoiced, then claim the CIS deducted separately. Entering the net figure understates turnover and loses you the credit.
Never registering as a subcontractor. Ten percentage points, for a free registration.
Inflating expenses. It converts a routine repayment into an enquiry.
Guessing when statements are missing. Figures that do not match the contractor’s CIS300 returns are the single biggest cause of held repayments.
Assuming a company can claim through Self Assessment. It cannot.
Putting It Into Practice: A Quick Checklist
- Registered as a CIS subcontractor so deductions are 20% rather than 30%
- Collected a payment and deduction statement from every contractor, for every month
- Chased any statements that are missing rather than estimating
- Totalled your CIS deductions for the tax year
- Gathered every expense record, including a mileage log
- Checked the expenses table above for anything you usually forget
- Calculated your position: profit, less £12,570, at 20% plus 6%, against deductions suffered
- Filed as soon after 6 April as your records allow
- Confirmed your bank details are correct on your Self Assessment record
- Checked whether earlier unclaimed years are still within the four-year window
- Used CIS40 or CIS41 instead if you stopped construction work mid-year
- Compared any percentage-based refund service against a fixed fee before signing
Key Takeaways
- CIS deducts 20% from gross labour without regard to your £12,570 personal allowance or your expenses, which is why most subcontractors are owed a refund.
- The refund is produced by the Self Assessment return itself; there is no separate application for sole traders.
- On £38,000 of labour with £8,000 of expenses, a typical refund is around £3,068.
- Every £100 of legitimate expense claimed adds about £26 to a basic-rate subcontractor’s refund.
- You can file from 6 April, and doing so rather than waiting until 31 January gets your money back up to ten months earlier.
- Clean claims are commonly repaid within two to four weeks; mismatches with contractor CIS300 returns are the main cause of delay.
- Earlier years can generally be claimed up to four years after the end of the tax year concerned.
Frequently Asked Questions
-
How do I claim my CIS tax refund?
By filing a Self Assessment tax return for the relevant tax year. There is no separate claim form for sole traders — the return calculates your actual liability, compares it with the CIS deducted, and HMRC repays the difference to your bank account. - How much CIS refund will I get?
It depends on your profit and expenses. Work out your profit after allowable costs, deduct the £12,570 personal allowance, apply 20% income tax and 6% Class 4 National Insurance to the remainder, then subtract that figure from the CIS deducted. On £38,000 of labour with £8,000 of expenses, the refund works out at around £3,068. - When can I file my CIS tax return?
From 6 April, the day after the tax year ends. You do not have to wait for 31 January, and if you are owed money there is no reason to. The deadline matters when you owe tax, not when HMRC owes you. - How long does a CIS refund take?
A clean online claim is commonly repaid within two to four weeks of being processed. Security checks, mismatches with the contractor’s monthly CIS300 returns, or other tax outstanding on your record can extend this considerably. Filing in April rather than January also avoids the busiest repayment period. - Can I claim a CIS refund for previous years?
Generally yes, for up to four years after the end of the tax year the deductions relate to. During 2026/27 that means 2022/23 is still within reach, closing on 5 April 2027. Each year needs its own return. - What if my contractor never gave me deduction statements?
Ask for them first, as contractors are legally required to issue one within 14 days of the end of each tax month. HMRC checks claims against the CIS300 returns the contractor filed, so the figures must match. Invoices and bank records can support a claim where statements are genuinely unavailable, but they make a check more likely. - I work through a limited company. Can I claim the CIS on my own tax return?
No. The company’s CIS deductions belong to the company and are offset against its PAYE, National Insurance and CIS liabilities through an Employer Payment Summary, with any excess reclaimed after the year end. You still file a personal return, but the company’s deductions do not go on it.
Conclusion
Almost every registered CIS subcontractor working a full year is owed money back, and the amount is usually measured in thousands rather than hundreds. The scheme is built to over-collect, because it deducts a flat percentage from gross labour with no knowledge of your allowance or your costs.
Two things determine what you actually end up with. The expenses you claim, where every £100 recovered is worth about £26 to a basic-rate subcontractor. And the date you file, where choosing April over January is the difference between having your money in May and having it the following February.
At Aksons Accounting we prepare CIS tax returns for subcontractors on a fixed fee rather than a percentage of the refund, and we file from April so the money comes back at the start of the year rather than the end of it. If you have a year’s worth of deduction statements in a drawer, or several years you have never got round to, send them over and we will tell you what you are owed.
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