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CIS

CIS Tax Returns and Refund Claims

For builders, electricians, plumbers, carpenters, groundworkers, painters and decorators, labourers and every other CIS subcontractor. Deductions checked against your statements, every allowable cost claimed and the return filed. Fixed fee, never a share of your repayment.

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The basics

What the Construction Industry Scheme actually is

The Construction Industry Scheme is a deduction at source system. A contractor who pays a subcontractor for construction work has to take money off the payment and send it to HMRC, and that money counts as an advance payment towards the subcontractor's Income Tax and National Insurance for the year.

It covers most construction work on buildings, structures and civil engineering, including site preparation, alterations, repairs, decorating and demolition. Some work is outside it, such as architecture and surveying, scaffolding hire without labour, carpet fitting, making materials and delivering materials. A business that does no construction work itself can still be caught as a deemed contractor once it has spent more than £3 million on construction in the twelve months since its first payment.

Subcontractors do not have to register, but it costs money not to. An unregistered subcontractor has 30% taken instead of 20%.

Deduction rates

Registered subcontractor, 20%
Not registered, 30%
Gross payment status, nothing deducted
Taken from labour only, not materials
VAT is excluded before the calculation
Plant hire and consumable stores excluded

Who files

If you are paid under CIS, a return is almost always needed

Self employed subcontractors

Builders, electricians, plumbers, carpenters and joiners, groundworkers, bricklayers, roofers, plasterers, painters and decorators, labourers and every other trade paid under deduction. Your turnover is the gross figure before CIS was taken off, and a Self Assessment return is how the deductions are set against your bill. With turnover above £1,000 a return is required in any event.

Partnerships in construction

A partnership registered under CIS files a partnership return, and each partner reports their share on their own return. Deductions are allocated between the partners.

Subcontractors who are also contractors

Plenty of trades sit on both sides, paid under deduction by a main contractor and paying their own subcontractors. You register in both capacities and file monthly contractor returns as well as your own.

Anyone with a CIS year to catch up

If you have not filed for one or more years, the deductions sitting with HMRC are not lost. There are time limits on claiming a repayment, so the sooner the returns go in the better.

How refunds work

A refund is a difference, not an entitlement

Work out your profit, which is gross income under CIS plus any other work less your allowable costs. Apply the personal allowance and the Income Tax rates, add Class 4 National Insurance, and that is your liability for the year. Subtract the CIS deducted and any payments on account. If what was deducted is more than the liability, the difference is repaid. If it is less, you pay the balance.

Deductions are taken from turnover at 20%, while tax and National Insurance are charged on profit after the personal allowance, which is why a repayment is the common outcome for a subcontractor whose costs are real. It is not guaranteed. Other income, a strong year, a student loan or the child benefit charge can all absorb the deduction.

Two things make the difference to the amount. Every statement has to be accounted for, because a missing one is a deduction you do not get credit for. And every allowable cost has to be claimed, because overstated profit means a smaller repayment.

The calculation

Gross income before CIS was deducted
Less allowable business costs
Equals taxable profit
Income Tax and Class 4 National Insurance on the profit
Less CIS deducted and payments on account
Result is a repayment or a balance to pay

Deductions explained

What the 20% is actually taken from

A contractor starts with your gross invoice and strips out everything that is not labour before applying the rate. Getting your invoices right protects your cash flow.

EXExcluded before the deduction

Taken out of the gross invoice first.

VAT	Excluded
Materials you paid forEvidence needed, or it is estimated	Excluded
Plant hire for the job	Excluded
Consumable stores	Excluded
Fuel, other than for travel	Excluded
Manufacturing or prefabricating materials	Excluded

Keep receipts for materials. Without evidence the contractor estimates the cost, and an estimate that is too low means more is deducted than it should be.

STThe statement

What the contractor must give you, and when.

DeadlineWithin 14 days of the tax month end	19th
Tax month	6th to 5th
Shows gross payment, materials and deduction	Yes
Needed to claim credit for the deduction	Yes
If one is missing	Chase it

Reconcile every statement to your bank. We do this as part of the return and tell you which months are unaccounted for.

Allowable expenses

The costs a trade actually incurs

Tools and small equipment, protective clothing and branded workwear, materials you paid for yourself, van running costs or mileage, parking, public transport to temporary sites, plant and equipment hire, waste disposal and skips, phone and data, use of home for quoting and paperwork, accountancy fees, trade subscriptions, bank charges and business insurance are all deductible where the cost was incurred wholly and exclusively for the work.

Larger items such as a van, a mixer or power tools are usually claimed through capital allowances rather than as a running cost, and the annual investment allowance normally means the full amount comes off in the year of purchase. A private element is apportioned rather than ignored.

Mileage is often the simplest route for vehicle costs. From the 2026 to 2027 tax year the flat rate is 55p a mile for the first 10,000 business miles in a car or goods vehicle and 25p after that, and 24p a mile for a motorcycle. Ordinary commuting to a permanent workplace is not claimable, and nor are everyday clothes, client entertaining or fines.

Claimed, and not claimed

Tools, protective clothing and branded workwear
Materials you bought yourself
Van costs or mileage at the flat rate
Plant hire, skips and waste disposal
Capital allowances on a van or equipment
Not ordinary commuting to one site
Not everyday clothing or entertaining

How it works

Statements in, return out, refund chased

Step one

Pull the year together

We register as your tax agent, collect your payment and deduction statements and bank statements and reconcile the two. Any month without a statement is flagged and chased before we go further.

Step two

Build the return

Gross income, every allowable cost, capital allowances on tools and vehicles, then the tax and National Insurance. You see the figures and the expected repayment or balance before anything is filed.

Step three

File and follow up

The return goes to HMRC online with your bank details for any repayment. We track it and deal with HMRC if a security check holds it up.

Fees

A fixed fee, not a share of your refund

We charge a fixed fee agreed before we start. A CIS return with self employment pages is £249, and an earlier year that needs catching up is from £249 a year. We do not take a percentage of a repayment, because the fee should not depend on the size of a figure we are calculating.

If you would rather have the records kept through the year, Sole Trader Plus at £69 a month includes bookkeeping, VAT returns, CIS returns and your Self Assessment, so there is nothing to pull together in January.

Where the picture is more involved, with a mix of CIS income, your own subcontractors or several outstanding years, tell us what it looks like and we will quote properly.

Typical fees

CIS return with self employment pages, £249
A missed earlier year, from £249 a year
Monthly, including CIS returns, from £69
Fixed fee, never a share of a refund
Scope written into the engagement letter

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Questions

Frequently asked

How much is deducted under CIS?

A contractor deducts 20% from a registered subcontractor and 30% from one who is not registered. A subcontractor with gross payment status has nothing deducted. The deduction is only taken from the labour element, after VAT, materials the subcontractor paid for, plant hire, consumable stores and fuel other than travel are taken out.

Will I definitely get a refund?

No. Whether anything comes back depends on your final tax and National Insurance for the year compared with what was deducted. Deductions are advance payments against that bill, not a separate tax. Many subcontractors are due a repayment because 20% of turnover exceeds the tax on their profit, but someone with other income or a good year can still owe money. We tell you the position once the figures are in, and we do not promise a refund before we have seen them.

What records do I need?

Your payment and deduction statements. A contractor must give you one within 14 days of the end of each tax month, so for the month running 6 May to 5 June the statement is due by 19 June. If any are missing we help you chase them, and we reconcile the total to your bank before the return is filed.

How long does a refund take?

HMRC processes most Self Assessment repayments within a few weeks of the return being filed, though a repayment can be held for security checks and we cannot control that. Filing early in the tax year rather than in January usually means it comes back sooner.

I am a limited company subcontractor. Is it the same?

No. A company does not reclaim CIS deductions on a Self Assessment return. The deductions are set against the company's own PAYE, National Insurance, CIS and Corporation Tax liabilities through the payroll scheme, and any excess is repaid to the company after the tax year end. We handle that alongside the payroll.

Should I apply for gross payment status?

It helps cash flow because nothing is deducted at source, but you have to meet HMRC's business, turnover and compliance tests and then keep your own filings and payments up to date or it can be withdrawn. We will tell you whether you are likely to qualify.