If you work in construction, your contractor may deduct tax before paying your invoice. These Construction Industry Scheme deductions count towards your final tax bill.
A CIS tax refund arises when you have paid more through deductions than you owe after your tax position is worked out. A refund is possible, but it is not guaranteed.
How you claim depends on your business structure. Sole traders normally account for CIS deductions through Self Assessment. Limited companies use a different process through their payroll scheme.
Understanding that difference helps you prepare the right records and avoid claiming through the wrong route.
Why Contractors Deduct CIS Tax
Under CIS, contractors normally deduct 20% when a subcontractor is registered and successfully verified. The deduction rises to 30% if the subcontractor is not registered or cannot be verified.
Subcontractors with gross payment status receive payments without CIS deductions and arrange their own tax payments.
The deduction does not normally apply to VAT or qualifying materials you have paid for directly. Keep receipts because the contractor may need evidence of those costs.
For example, assume an invoice contains £1,000 for labour and £200 for qualifying materials, with no VAT.
At the standard deduction rate, the contractor deducts £200 from the labour amount. You receive £1,000 from the £1,200 invoice.
That £200 is tax paid in advance. It is not a reduction in the price you charged.
Why You Might Be Due a CIS Refund
CIS deductions are taken during the year. Your final tax calculation considers your taxable profit, allowances and other income.
Allowable business expenses reduce taxable profit. This can leave you with a lower tax bill than the amount already deducted.
For example, you may have bought tools, paid business insurance or incurred qualifying travel costs. Your Personal Allowance may also reduce the income subject to tax.
However, other earnings can change the result. Income from another job, property or a separate business may increase the amount you owe.
You should therefore work out your complete tax position before treating a potential refund as money available to spend.
A Worked CIS Tax Refund Example
Consider a sole trader in England during the 2026/27 tax year.
Assume they are below State Pension age, have no other income and qualify for the full Personal Allowance. They have no student loan liability or other tax adjustments.
All £40,000 of their turnover is labour income subject to a 20% CIS deduction. Their allowable business expenses total £8,000.
| Calculation | Amount |
| Income before CIS deductions | £40,000 |
| Allowable business expenses | £8,000 |
| Taxable business profit | £32,000 |
| Personal Allowance | £12,570 |
| Profit subject to Income Tax | £19,430 |
| Income Tax at 20% | £3,886 |
| Class 4 National Insurance at 6% | £1,165.80 |
| Total Income Tax and Class 4 National Insurance | £5,051.80 |
| CIS deductions already taken | £8,000 |
| Illustrative overpayment | £2,948.20 |
This uses the current Personal Allowance, basic Income Tax rate and Class 4 National Insurance thresholds. At this profit level, Class 2 contributions are treated as paid without a separate charge. Scottish Income Tax rates differ.
The example shows a possible overpayment, not a promised refund. Outstanding liabilities or adjustments on the taxpayer’s account could affect the amount repaid.
How Sole Traders Claim a CIS Tax Refund
At the end of the tax year, complete your Self Assessment return using your full business records.
Report income before CIS deductions. Enter the deductions separately in the relevant CIS field. HMRC then credits those deductions against the amount due.
A useful preparation process is to:
- Collect statements from every contractor.
- Match each statement to the related invoices and bank payments.
- Total your income before deductions.
- Review your allowable expenses.
- Include any other income that belongs on the return.
- Check the calculation and repayment details before submitting.
Do not simply total the money received into your bank account and use that as turnover. Payments received after CIS deductions will understate the income you earned.
Also avoid recording CIS deductions as a business expense. They represent tax already paid.
Records to Gather Before You Claim
Keep a folder for each tax year containing your invoices, deduction statements, receipts and bank records.
Your contractor must provide a payment and deduction statement within 14 days of the end of the relevant tax month. Ask for a replacement if one is missing.
If you cannot obtain statements, HMRC provides a process for writing to them with the contractor’s details, payment dates and an explanation.
For your own checks, a simple spreadsheet can contain:
| Record | What to check |
| Invoice | Amount charged and any materials listed |
| Deduction statement | Gross payment and CIS amount deducted |
| Bank payment | Amount received and payment date |
| Expense receipt | Business purpose and amount paid |
Review differences while the work is still recent. It is easier to resolve an incorrect statement with the contractor at that point than several months later.
Which Expenses Can Reduce Your Taxable Profit?
The correct expenses depend on your work and how you use each item.
Costs to review include business insurance, phone charges, qualifying travel and the appropriate treatment of tools or equipment. Where something has both business and personal use, only the allowable business share should be claimed.
You cannot claim both the trading allowance and actual business expenses against the same income.
Protective clothing can qualify, but ordinary clothing does not become deductible simply because you wear it on site. HMRC distinguishes protective clothing and uniforms from everyday clothes.
Keep evidence and a brief explanation for costs that may be unclear. The aim is an accurate claim supported by records.
When Can You Claim Your Refund?
For an ongoing sole-trader business, the normal claim is made through the return after the tax year ends.
As of September 2026, you can submit your 2025/26 tax return. That year ran from 6 April 2025 to 5 April 2026.
The standard deadlines are:
| Requirement for 2025/26 | Deadline |
| Tell HMRC you need to file, where required | 5 October 2026 |
| Submit a paper return | 31 October 2026 |
| Submit an online return | 31 January 2027 |
| Pay any balancing tax due | 31 January 2027 |
You do not need to wait until January to file.
The worked example above uses 2026/27 figures. That tax year ends on 5 April 2027, so it should not be confused with the return currently due.
If you stop trading, an earlier refund claim may be available under HMRC’s separate procedure.
How CIS Refunds Work for Limited Companies
A limited company reports deductions suffered through an Employer Payment Summary, using the year-to-date total.
HMRC applies the credit against the company’s payroll liabilities. Unused amounts can carry forward within the same tax year. Do not claim the deductions through the Corporation Tax return.
After the tax year ends, the company can claim an unused balance through HMRC’s company CIS repayment process. Relevant payroll submissions, Company Tax returns and any contractor CIS returns must be up to date.
HMRC first applies the credit against overdue PAYE or Corporation Tax. Any remaining balance can be refunded or allocated to certain other tax bills.
Keep the company’s claim separate from your personal return. The deductions belong to the business that earned the income.
How Long Does a CIS Refund Take?
There is no payment date that applies to every claim.
For limited-company CIS repayment claims, HMRC currently says it usually responds within eight weeks. A response is not a guarantee that payment will reach the bank within that period.
HMRC may request further evidence if the claim is incomplete or differs from contractor records.
For a sole-trader claim, check the repayment position through your Self Assessment account. Keep your submission confirmation and any HMRC correspondence together.
Avoid relying on a refund to cover an immediate bill until the repayment has been confirmed.
Common Questions About CIS Refunds
Can I claim if tax was deducted at 30%?
Yes. The higher deduction rate does not remove your right to have deductions credited in the final tax calculation. Whether a refund arises depends on the amount you actually owe. Check your registration and verification details with the contractor too.
Does using an accountant increase my refund?
An accountant can help identify allowable costs and check the records. The refund itself depends on the correct tax calculation. It should not depend on adding unsupported expenses or promising a fixed repayment.
Before appointing someone, ask what their fee covers and whether it is fixed or deducted from the refund.
Can a company claim before the tax year ends?
HMRC allows this in specific cases, including where the business has stopped trading or deductions were taken after a change to gross payment status. Supporting statements are required.
Get Help With Your CIS Tax Return
If you are unsure whether your deductions match your records, speak to RMA Accountants before submitting your claim.
Bring your contractor statements, invoices, expense records and details of other income. These provide the starting point for checking whether you have overpaid and which claim process applies to your business.
