If you are a self-employed subcontractor under the Construction Industry Scheme (CIS), you claim back tax deducted by contractors through your Self Assessment tax return. You enter your total pay before deductions as income and the total CIS deductions separately. HMRC works out your tax and National Insurance, takes off what contractors have already paid on your behalf and, if more was deducted than you owe, pays the difference back to you. If you are still trading, there is no separate refund form. The return does it.
This guide is for subcontractors working as sole traders or in partnerships. Limited companies get credit for CIS deductions a different way, which we cover briefly below. The rules are as HMRC's guidance stood when we checked it in September 2026.
How CIS deductions work
Under CIS, contractors take money from a subcontractor's payments and pass it to HMRC. According to GOV.UK, these deductions count as advance payments towards your tax and National Insurance.
The rate depends on your registration:
- 20% if you are registered for CIS
- 30% if you are not registered
- nothing if HMRC has given you gross payment status
GOV.UK says subcontractors should register, and the higher rate means more of your pay is held back until your return is dealt with. You register online with your Unique Taxpayer Reference (UTR).
What contractors should not deduct from
Contractors should not take CIS deductions from the following parts of your invoice:
- VAT
- materials you paid for directly
- plant hired for the job
- consumable stores used up on the job
- manufacturing or prefabricating materials
Showing materials and VAT as separate lines on each invoice makes it easier to check that deductions have been worked out on the right amount.
Payment and deduction statements: the records you need
Your contractor must give you a statement within 14 days of the end of each tax month, showing what they paid you and what they deducted. These statements are your evidence of the tax already paid, so keep every one.
Before you file, add up the statements for the tax year and check them against your own records of what you were paid. If a statement is missing or looks wrong, ask the contractor first. If you cannot get one, for example because the contractor has stopped trading, you can write to HMRC with your name, address and UTR, the contractor's name and address, their tax reference if you know it, the payment dates or tax months, and why you do not have the statement. The address is on the GOV.UK subcontractor guide.
Our Self Assessment checklist lists the other documents to have ready.
How to claim CIS deductions on your Self Assessment return
On the self-employment pages of your return you record:
- your total pay before any deductions, as income
- the total deductions contractors have taken, as CIS deductions
- your allowable business expenses
HMRC then calculates the tax and National Insurance due on your profit and takes off the CIS deductions. If there is more to pay, it is due by 31 January following the end of the tax year, and you may also need to make payments on account towards the next year. If the deductions come to more than your bill, HMRC repays the difference.
For the 2025 to 2026 tax year, the online deadline is 31 January 2027. You do not have to wait until January. You can file as soon as the tax year has ended and you have your figures, so if you are due money back you are not left waiting for the January deadline to claim it. If you have not filed before, our post on who needs to file a Self Assessment tax return explains registration.
Expenses CIS subcontractors can claim
Your tax is worked out on your profit, not on your gross pay, so claiming the right expenses matters. Allowable expenses for self-employed people include:
- materials you buy for the jobs you do
- van and travel costs such as fuel and parking for travel to sites, though not your ordinary commute
- uniforms and protective clothing you need for the work, but not everyday clothes
- phone bills and stationery
- insurance, such as public liability cover
- training courses that relate to your trade
- costs of subcontractors you pay yourself
If you use the cash basis, which is now the standard for sole traders, tools, equipment and vans are claimed as ordinary expenses. Cars are the exception and go through capital allowances. If you use traditional accounting, equipment and vans go through capital allowances. If your costs are low, you can use the £1,000 trading allowance instead of claiming actual expenses, but not both.
Why the tax deducted can be more than you owe
The 20% deduction is a flat rate on each payment. It takes no account of your expenses or your Personal Allowance, so the amount deducted during the year can be more than the tax and National Insurance due on your profit, and the return is where that is put right. Whether you are owed anything depends entirely on your own figures.
Common reasons more tax is taken than needed, or a repayment is smaller than it should be:
- not being registered, so 30% is deducted instead of 20%
- deductions taken from VAT or from materials you paid for directly
- expenses left off the return
- statements missing, so not all deductions are claimed
Gross payment status
With gross payment status, contractors pay you in full and you pay your tax through Self Assessment. You can apply if you meet three tests: that you have paid your tax and National Insurance on time in the past, that your business does construction work in the UK and runs through a bank account, and that your construction turnover, ignoring VAT and materials, is at least £30,000 over the last 12 months as a sole trader. The partnership and company tests are on GOV.UK. HMRC reviews gross payment status every year, so late filing or payment can put it at risk.
If you trade as a limited company
A limited company does not use Self Assessment for this. It reports CIS deductions it has suffered through its payroll, on an Employer Payment Summary, and HMRC credits them against what the company owes. Deductions left over can be carried forward within the tax year, and any excess at the end of the year can be claimed back. This is handled as part of our payroll and CIS service.
Help with your CIS tax return
If you would like your statements checked against what you were paid, your expenses claimed properly and your return filed well ahead of the deadline, speak to George Isaacs. Get in touch to arrange a free consultation.