CIS tax refunds: how subcontractors claim back deductions

By The Money Sheets · Last checked 22 October 2026

Under the Construction Industry Scheme (CIS), contractors take tax off your payments before you get them. Those deductions are advance payments towards your tax and National Insurance. Because they're worked out on your gross labour, not your profit, many self-employed subcontractors have paid too much by the end of the year and get money back.

How much contractors deduct

• 20% if you're registered for CIS and the contractor can verify you.
• 30% if you're not registered, or they can't verify you.
• Nothing if you have gross payment status (you then pay all your tax at the end of the year).

Contractors should not deduct from the parts of your invoice for VAT, materials you paid for, consumable stores, plant hired for the job, or manufacturing or prefabricating materials. They may ask for receipts for materials; if you don't have any, they'll estimate the cost. A deduction taken from materials is one of the most common reasons a payment looks wrong.

Keep your monthly statements

Each contractor must give you a payment and deduction statement within 14 days of the end of each tax month. Keep them all: HMRC may ask for evidence of your deductions. If a figure looks wrong, speak to the contractor. If you can't get a statement (for example the contractor has gone out of business), HMRC tells you to write to PT Operations, HM Revenue and Customs, BX9 1BX with your details, the contractor's details and the payment dates.

How a sole trader claims the refund

At the end of the tax year, send your Self Assessment return as usual and record:

• your total pay before deductions, as income
• the total deductions contractors took, as "CIS deductions"

HMRC works out what you owe, takes off the CIS deductions, and pays back anything extra. If you still owe tax, it's due by 31 January after the tax year ends. You can file a return from 6 April, so filing early means an earlier refund. If you stop trading, there's a separate form to claim deductions back for the current year. Limited companies claim differently, through their payroll scheme (EPS).

Worked example (2026/27, illustrative)

A sole trader in England is paid £30,000 for labour under CIS at 20%, and has £4,000 of allowable expenses. They have no other income and no student loan.

Uses the 2026/27 rates on GOV.UK (Personal Allowance £12,570, basic rate 20%, Class 4 NI 6% on profits between £12,570 and £50,270). With profits over £7,105, Class 2 NI is treated as paid. Scotland has different Income Tax bands. Your own result depends on all your income; this is an illustration, not advice.

Gross payment status

If you'd rather be paid in full, you can apply for gross payment status. HMRC looks at your last 12 months: as a sole trader you need construction turnover of at least £30,000 (ignoring VAT and materials), a record of paying tax on time and a business bank account.

Tracking it without the shoebox

Our CIS Subcontractor Tracker works out the deduction on each payment (labour only), flags a payment when the contractor took off the wrong amount, totals your year for the return and estimates your likely refund. Try the free CIS take-home calculator for a single payment.

Last checked against GOV.UK on 22 October 2026. The Autumn Budget on 28 October 2026 may change some rules for later tax years; we re-check this page after each Budget and every April.

Sources

• GOV.UK: What you must do as a CIS subcontractor (checked 22 October 2026)
• GOV.UK: Income Tax rates and Personal Allowances (checked 22 October 2026)
• GOV.UK: Self-employed National Insurance rates (checked 22 October 2026)

This guide is general information, not tax, legal or financial advice.