How to claim a CIS tax refund

If you are a subcontractor under CIS, there is a good chance HMRC owes you money, and often a few thousand pounds of it. That money back is a CIS tax refund. The trade calls it a CIS rebate, and reclaiming your CIS means the same thing again: they are all one process. This guide explains why it happens, how the refund is worked out, and how to claim it yourself without paying anyone a cut.

If you would rather just see a number, the free CIS tax refund calculator estimates your refund from three figures in a couple of minutes.

Why CIS subcontractors are usually owed money

Under the Construction Industry Scheme, a contractor does not pay you in full. They take a deduction off your labour and send it to HMRC as an advance payment towards your tax and National Insurance. The rate is 20 per cent if you are registered, or 30 per cent if you are not, and it comes off the labour only, not materials or VAT. The rules are set out on GOV.UK.

Here is the catch. That deduction is taken off your gross labour, before you have taken off a single expense. But your actual tax bill is worked out on your profit, which is your income minus your costs: tools, van, fuel, materials, insurance, phone, and the rest. Because the deduction ignores all of that, the amount taken off during the year is usually more than you actually owe. That overpayment is your refund.

How much do you get back?

The refund is, roughly, the CIS taken off minus the tax and National Insurance actually due on your profit.

The tax and National Insurance on your profit are worked out like this, using the Income Tax bands for England, Wales and Northern Ireland, and the Class 4 National Insurance rates, for the 2025/26 and 2026/27 tax years, which are frozen at the same figures. Scotland sets its own Income Tax bands, so a Scottish taxpayer's figures differ.

• The first £12,570 of profit is covered by your Personal Allowance, so no Income Tax.
• Profit from £12,571 to £50,270 is taxed at 20 per cent.
• Profit from £50,271 to £125,140 is taxed at 40 per cent, and anything above £125,140 at 45 per cent.
• On top of that, Class 4 National Insurance is 6 per cent on profit between £12,570 and £50,270, then 2 per cent above.

Add those together, take the result off the CIS already deducted, and what is left is your refund. If your profit was high and your expenses low, you might have little to come back, or even a small amount still to pay. For most subcontractors, though, the deductions overshoot and there is money owed.

A worked example

Say you are a registered subcontractor and your contractors paid you £36,000 of labour over the year. At 20 per cent, they deducted £7,200 in CIS and sent it to HMRC.

Through the year you spent £6,000 on the business: van running costs, tools, materials you paid for yourself, insurance, phone. Your profit is £36,000 minus £6,000, which is £30,000.

The tax actually due on £30,000 of profit:

• Income Tax: £30,000 minus the £12,570 Personal Allowance leaves £17,430, taxed at 20 per cent, which is £3,486.00.
• Class 4 National Insurance: 6 per cent on the same £17,430, which is £1,045.80.
• Total due: £4,531.80.

£7,200 was already deducted, so the refund is £7,200 minus £4,531.80: £2,668.20 back.

Notice what the £6,000 of expenses did. Without them, your profit would have been £36,000, the tax due about £6,092, and the refund about £1,108. Recording your costs more than doubled the money back. Figures use the England, Wales and Northern Ireland bands above; a Scottish taxpayer's Income Tax differs.

Why your expenses matter so much

This is the part worth getting right, because it goes straight into your pocket. Every legitimate business expense you claim lowers your taxable profit, which lowers your tax bill, which raises your refund pound for pound at your tax rate.

If you have not been keeping track of your costs, you are almost certainly leaving money with HMRC. Tools and equipment, van running costs or mileage, materials you paid for, protective clothing, public liability insurance, your phone, use of home as an office: these are ordinary allowable costs for a trade. Not sure whether something counts? The free expense checker gives you a plain answer with HMRC-based guidance.

The lesson is simple. Keep every receipt through the year, because at refund time each one is worth a slice of tax back.

How to claim it, as a sole trader

You claim your CIS refund through your Self Assessment tax return. On the return you declare the full amounts you invoiced as income, and enter the CIS deducted in the CIS deductions field. HMRC then, in its own words, "will work out your tax and National Insurance bill and take off any deductions made by contractors." If too much was taken, "HMRC will pay the money back." The detail is on the pay tax and claim back deductions page.

Two things make this go smoothly:

• Keep your monthly CIS statements. Every contractor must give you a payment and deduction statement. They are your proof of what was taken, and the figure HMRC checks against.
• File an accurate return by the deadline. The online Self Assessment deadline is 31 January after the tax year ends.

One more practical point: there is no separate CIS reclaim form for sole traders. The Self Assessment return is the claim. You are not applying for anything special, just filing the return you have to file anyway, with the CIS deductions box filled in.

Do you need a CIS refund company?

No. It is worth saying plainly, because "CIS refund services" advertise heavily at exactly the people reading this: a refund company files the same Self Assessment return you can file yourself for free, and takes a cut, sometimes a large one, of money you were always entitled to. There is nothing they can claim that you cannot claim yourself.

If your affairs are genuinely complicated, a qualified accountant is the better version of paying for help: a fixed fee, advice that covers your whole tax position, and no percentage taken off your refund.

How long does a CIS refund take?

Once you have filed, HMRC works out the position and pays back anything overpaid. How quickly that lands varies, and it can take longer if HMRC runs checks, or if your record does not line up with what your contractors reported. That is another reason to keep your statements and file figures you can stand behind.

Limited companies claim differently

If you work through a limited company, the mechanics are not the same. Your company sets its CIS deductions off against its own PAYE and National Insurance bill through the payroll during the year, and claims any excess back separately after the tax year ends. It does not go on the Corporation Tax return. HMRC has a dedicated process for this: claim a refund of CIS deductions if you're a limited company.

A note on using this guide

This guide explains the general position for a sole trader subcontractor to help you understand how CIS refunds work, not as tax advice for your situation. The numbers turn on your own income, expenses and circumstances, so if you are unsure, or the amounts are significant, check with HMRC or an accountant before you file.

When you are ready, the free CIS tax refund calculator gives you an estimate. And if you keep your records in Trame, the CIS deducted on your invoices and your expenses are already sorted into the right HMRC categories, so your figures are ready when it is time to file.

To see your whole tax picture for the year, not just the CIS you can claim back, the self-employed tax calculator works out your full Income Tax and National Insurance bill.

If VAT on your construction work is also on your mind, the reverse charge is the other rule that trips subcontractors up. See the VAT domestic reverse charge for construction, explained.

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