If you’re a CIS subcontractor, you may have had more tax deducted than you actually owe once your expenses and personal allowance are taken into account. Every time a contractor pays you, they deduct tax under the Construction Industry Scheme (CIS) and send it straight to HMRC — before the money even hits your account. Because CIS deductions are a set percentage, they may not match your actual tax liability. If that’s the case, you could be due a refund through Self Assessment.
For many subcontractors we work with here in Salisbury and across Wiltshire, that refund can be worth thousands of pounds.
In this guide, we’ll walk you through how CIS deductions work, how to check whether you’re due a refund, and what you need to do to claim it.
What Is the CIS Scheme and Why Does It Matter?
The Construction Industry Scheme is a set of rules from HMRC that applies to contractors and subcontractors working in construction. If you’re a subcontractor — whether you’re a plumber, electrician, bricklayer, plasterer, roofer, or any other trade — your contractor is legally required to deduct tax from your payments and pass it to HMRC on your behalf.
The standard deduction rate is 20% if you’re registered with CIS. If you’re not registered, it jumps to 30%. That tax comes off the labour element of your invoice before you get paid.
Here’s where it gets important: that 20% or 30% is a flat-rate deduction. It doesn’t take into account your actual expenses, your personal allowance, or any other tax reliefs you’re entitled to. So the amount deducted may well be more than your final tax bill — and if it is, you’re entitled to claim the difference back.
Are You Owed a CIS Tax Refund? (How to Check)
If any of the following apply to you, there’s a strong chance you’re due a CIS tax refund:
- You’ve had 20% or 30% deducted from your pay but haven’t claimed back any expenses against your income.
- Your total tax liability is lower than the CIS deductions made — meaning more has been taken than you actually owe.
- You have allowable business expenses — tools, travel, materials, work clothing — that reduce your taxable profit.
- You haven’t used your full personal allowance (currently £12,570), meaning some of your income should have been tax-free.
- You’ve had CIS deducted by multiple contractors, and the total deductions are more than you actually owe.
The simplest way to check whether you’re owed a CIS refund is to complete your Self Assessment tax return, where HMRC compares your CIS deductions with your final tax liability. If you’ve had more deducted than you owe, they’ll refund the difference.
If you haven’t filed your return yet, HMRC could be sitting on money that’s rightfully yours.
How Much Could You Claim Back?
This is the bit that surprises most people. Let’s look at a real-world example.
For example, if you invoiced £40,000 for labour only and had the standard 20% CIS deduction applied, that’s £8,000 taken from your pay and sent to HMRC. But if you also had £10,000 of allowable expenses — van costs, fuel, tools, materials, insurance — your taxable profit is lower, and your final tax bill could be significantly less than the £8,000 already deducted. In a case like this, you may be due a sizeable refund. This is even before taking into account your personal allowance, which could boost your tax refund by around £2,500 on average.
The exact amount depends on your personal circumstances — National Insurance and other factors can affect the final figure — but we regularly see CIS refunds worth thousands of pounds for subcontractors who haven’t been claiming their expenses.
What Expenses Can You Claim?
You can offset a wide range of legitimate business costs against your CIS income. These include:
- Tools and equipment — drills, saws, hand tools, ladders, replacement parts
- Business travel to temporary sites — fuel, mileage, parking, tolls (regular commuting to a permanent workplace is not claimable)
- Protective clothing and PPE — hi-vis jackets, steel-toe boots, hard hats, overalls (ordinary clothing is not usually claimable)
- Materials you supply — anything you buy and provide for a job
- Vehicle costs — van insurance, servicing, repairs, or a mileage allowance
- Phone and internet — the business portion of your mobile and broadband
- Training and courses — as long as they’re related to your current trade
- Accountancy fees — yes, the cost of getting your tax return done is itself an allowable expense
- Public liability insurance and other business insurance
Keeping good records helps you support any expense claim if HMRC asks — so hold on to your receipts, invoices, and bank statements.
How to Claim Your CIS Tax Refund — Step by Step
Claiming your CIS refund isn’t as complicated as it might sound. Here’s what’s involved:
- Gather your CIS payment and deduction statements. Your contractor should give you a written statement each month they pay you, showing the gross amount, the deduction, and the net payment. You’ll need these.
- Pull together your expense records. Receipts, invoices, bank statements — anything that supports your allowable business costs.
- Register for Self Assessment (if you haven’t already). You’ll need a Unique Taxpayer Reference (UTR) number from HMRC.
- Complete and file your Self Assessment tax return. This is where you declare your CIS income, list your expenses, and show what tax has already been deducted. HMRC will calculate the difference.
- Receive your refund. If you’ve overpaid, HMRC will either send you a cheque or pay the refund directly into your bank account. Refunds typically take a few weeks once your return has been processed, though it can be quicker if you file online.
Common CIS Mistakes That Cost Subcontractors Money
Over the years, we’ve seen the same issues crop up again and again. Here are the most common CIS mistakes — and they all end up costing you money:
- Not keeping receipts or records. If you can’t prove an expense, you can’t claim it. A simple folder in your van or a photo app on your phone can save you hundreds.
- Missing claimable expenses. Many subcontractors only think of the obvious ones like tools and materials, but forget about travel, phone costs, insurance, advertising and relevant training.
- Not claiming for the cost of buying a suitable vehicle. Buying the right type of vehicle can make a huge difference to your overall tax liability.
- Not being registered for CIS. If you’re unregistered, contractors deduct 30% instead of 20%. That’s a significant difference on every payment. Registering is free and straightforward.
- Filing your tax return late. Miss the 31 January deadline and you’ll face automatic penalties, even if HMRC owes you money. Late filing can also delay your refund.
- Not filing at all. Some subcontractors assume that because tax has already been deducted, they don’t need to file a return. That’s not the case — and it means they never claim back what they’re owed.
If any of these sound familiar, it’s worth getting them sorted now rather than letting more money slip through the cracks.
When Should You Use an Accountant for Your CIS Refund?
You can file your own Self Assessment return — HMRC’s online system is designed to let you do it yourself. But there are times when having an accountant in your corner makes a real difference:
- You’re not sure what you can and can’t claim. The rules around allowable expenses aren’t always obvious, and missing legitimate claims means leaving money behind.
- You’ve worked for multiple contractors. Keeping track of different deduction statements and making sure everything adds up takes time and care.
- You want to make sure you’re not leaving money on the table. A good accountant will look at your full picture — not just your CIS deductions, but your overall tax position, including whether choosing the right business structure could save you more in the long run.
- You want a qualified accountant to work with you during the tax year, to give you timely tax advice and feedback along the way. It can be frustrating to find out you could have saved yourself significant amounts of tax if only action had been taken BEFORE your year end.
- You’d rather spend your time on the tools, not on paperwork. That’s fair enough. It’s what we’re here for.
An accountant’s fee is a business expense in itself, so it reduces your tax bill too. For most subcontractors, the refund recovered far outweighs the fee paid.
How Caboodle Helps Salisbury Subcontractors
At Caboodle, we work with tradespeople and subcontractors across Salisbury and Wiltshire every day. We understand the construction industry, the pressures you’re under, and the fact that tax paperwork is probably the last thing you want to deal with after a long day on site.
That’s why we keep things simple. We’ll go through your CIS deduction statements, identify every expense you can claim, file your Self Assessment return, talk to HMRC on your behalf and make sure you get back every penny you’re entitled to. No jargon, no fuss.
Our founder, Karen Eyers, is a Fellow of the Association of Chartered Certified Accountants with over 30 years of experience, and our experienced team genuinely cares about getting the best result for every client. We’re based just outside Salisbury, and we’re always happy to have a chat — whether that’s face to face, over the phone, or on a video call.
If you’d like to find out more about our CIS services or any of the other ways we support small businesses, we’d love to hear from you.
If you think you might be owed a CIS tax refund, get in touch. We’ll take a look at your situation, let you know what you could be owed, and handle the whole process for you. No obligation — just honest advice from local accountants who want to help local businesses like yours.