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, or a CIS rebate as it is often called in the trade. They are the same thing. 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 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.

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 thing worth saying plainly: you can do all of this yourself, for free. Refund companies will file it for you and take a cut, sometimes a large one, of money you were always entitled to. There is nothing they do that you cannot.

How long a CIS refund takes

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.

---

Frequently asked questions