Why am I owed a CIS tax refund?

Contractors deduct 20% (or 30% if you're not CIS-registered) from your labour payments as an advance toward your tax. But that's taken from your gross pay before your business expenses and £12,570 Personal Allowance. Once those are applied, your actual tax is usually much lower, so the deductions overpay and HMRC refunds the difference.

How do I claim a CIS tax refund?

Through your Self Assessment tax return. You report your income, the CIS deducted, and your expenses. HMRC credits the CIS against your Income Tax and Class 4 NI, and refunds anything overpaid — usually within 4 to 8 weeks of accepting your return.

How long do I have to claim a CIS refund?

You can claim within four years of the end of the relevant tax year, even if you've left the construction industry.

What expenses can I claim as a CIS subcontractor?

Tools and equipment, protective clothing (PPE), materials you paid for, van running costs or business mileage, public liability insurance, training, phone and admin costs. Each expense lowers your taxable profit and increases your refund.

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CIS tax refund: how subcontractors claim back what they're owed

By Remus Pantea · 16 June 2026 · 6 min read

Quick answer: If you're a CIS subcontractor, you're probably owed a refund. Contractors deduct 20% from your pay as an advance on tax — but that's taken before your expenses and your £12,570 tax-free Personal Allowance. Once those are applied, your real tax bill is usually far lower, so you claim the difference back through Self Assessment.

How CIS deductions work

Under the Construction Industry Scheme, contractors take money off your invoices and pay it straight to HMRC as an advance toward your tax and National Insurance:

20% if you're registered for CIS
30% if you're not registered
0% if you hold Gross Payment Status (you're paid in full and settle through Self Assessment)

Crucially, CIS is only deducted from the labour part of your invoice. Materials you paid for are not subject to the deduction — as long as you show them separately.

Why you're usually owed money

The deduction is a flat percentage of your gross pay. It ignores two big things that reduce your actual tax: your business expenses, and your £12,570 Personal Allowance. Almost every subcontractor has real costs — tools, van, fuel, insurance — so the 20% taken over the year is usually more than you genuinely owe.

A worked example

Say you invoiced £45,000 of labour over the year, with 20% CIS deducted:

CIS deducted and paid to HMRC: £9,000
Your business expenses (tools, van, fuel, insurance, PPE): £7,000
Taxable profit: £45,000 − £7,000 = £38,000
Income Tax + Class 4 NI actually due on £38,000: about £6,612

You've paid £9,000 but owe about £6,612 — so your refund is around £2,388. The more legitimate expenses you've kept receipts for, the bigger the refund. (Check your own numbers with the tax calculator.)

How to claim it back

You claim through your Self Assessment tax return:

Report your total income and the CIS deductions taken (your contractor must give you monthly CIS deduction statements — keep them).
Claim all your allowable expenses.
HMRC credits the CIS already paid against your Income Tax and Class 4 NI, and refunds anything overpaid — usually within 4–8 weeks of accepting your return.

You have four years from the end of the tax year to claim, even if you've since left construction.

What you can claim (and most people miss)

Tools & equipment — including replacements and small power tools
Protective clothing & PPE — boots, hi-vis, hard hats, gloves
Materials you paid for on a job
Van costs or mileage — fuel, or 55p/mile (first 10,000 miles) under simplified expenses
Public liability insurance and trade memberships
Training & certifications, phone, and admin costs

Every receipt you can't find is refund money you don't get back. The subcontractors with the biggest refunds are simply the ones who kept their receipts.

Keep your statements and receipts as you go

PocketReceipt stores your CIS deduction statements and scans every tool, fuel and materials receipt into HMRC categories — so when you (or your accountant) file, the full claim is ready and your refund is as big as it should be. Free on iOS and Android.

Sources: gov.uk Construction Industry Scheme; gov.uk Self Assessment. CIS deduction rates and the four-year claim limit per HMRC guidance. General information, not tax advice.