CIS and Self Assessment: How They Interact

The Connection Between CIS and Self Assessment

If you are a self-employed subcontractor in the construction industry, CIS and Self Assessment are intimately connected. CIS deductions taken from your payments throughout the year are not a separate tax — they are advance payments towards your income tax and National Insurance.

When you file your Self Assessment tax return, you report your total CIS deductions. HMRC then offsets them against your actual tax liability. If the deductions exceed what you owe, you get a refund. If they fall short, you pay the difference.

What to Include on Your Self Assessment

On the self-employment pages of your tax return, you need to provide:

Income Details

• Turnover — your total income from construction work before expenses
• Other self-employment income — any non-construction self-employment income

CIS Deductions

• Total CIS deductions suffered — the total amount deducted from your payments by contractors during the tax year (6 April to 5 April)

This figure comes from the payment and deduction statements your contractors have issued to you. Add up every deduction across all contractors for the tax year.

Expenses

• All your allowable business expenses, categorised correctly
• Materials you purchased for jobs (separate from the materials deducted on CIS statements)

How HMRC Calculates Your Tax

HMRC follows this process:

1. Calculate your taxable profit — gross income minus allowable expenses
2. Calculate your income tax — applying the Personal Allowance and tax bands
3. Calculate your National Insurance — Class 2 and Class 4
4. Add up your total tax liability
5. Subtract your CIS deductions — these are credits against your bill
6. Calculate the balance — either a refund or further payment due

Example for 2025/26

• Gross construction income: £45,000
• Allowable expenses: £10,000
• Taxable profit: £35,000
• CIS deductions suffered (20% on £45,000 labour): £9,000

Tax calculation:

• Personal Allowance: £12,570
• Taxable at 20%: £35,000 - £12,570 = £22,430 × 20% = £4,486
• Class 4 NI: 6% on profits between £12,570 and £50,270 = £1,345.80
• Class 2 NI: £179.40

Total tax and NI: £6,011.20

CIS deductions paid: £9,000

Refund due: £2,988.80

Timing Matters

Filing Deadline

The Self Assessment deadline for the 2025/26 tax year is:

• 31 October 2026 for paper returns
• 31 January 2027 for online returns

However, you do not need to wait until January. You can file your return as early as 6 April 2026, and HMRC will process any refund claim from that point.

When You Will Receive Your Refund

If you are due a refund, HMRC typically processes it within:

• 4 weeks if you file online and have a bank account set up with HMRC
• 6-12 weeks if HMRC needs to carry out additional checks

Filing early means receiving your refund sooner. There is no advantage to waiting.

Payments on Account

If your Self Assessment shows that you owe more than £1,000 in tax (after deducting CIS and any PAYE), HMRC will set up payments on account for the following year. These are advance payments of next year's tax, due on 31 January and 31 July.

If your CIS deductions typically cover most of your tax liability, you may be able to apply to reduce your payments on account. This prevents you from tying up cash unnecessarily.

Common Mistakes to Avoid

1. Not Reporting CIS Deductions

Some subcontractors forget to enter their CIS deductions on their tax return. This means they pay tax twice — once through CIS deductions and again through Self Assessment. Always enter your total CIS deductions.

2. Using the Wrong Figures

Your CIS deduction figure should come from your payment and deduction statements, not from your own calculations. The statements show exactly what was deducted and paid to HMRC on your behalf.

3. Mixing Up Tax Years

CIS deductions for Self Assessment purposes are based on the date the payment was made, not the date the work was done. If you did work in March 2026 but were paid in April 2026, the CIS deduction falls in the 2026/27 tax year, not 2025/26.

4. Not Claiming Expenses

Many subcontractors focus on reporting income and CIS deductions but understate their expenses. Every legitimate expense reduces your taxable profit and increases your refund. Common expenses include tools, vehicle costs, travel, phone, insurance, and protective clothing.

5. Discrepancies with HMRC Records

Occasionally, a contractor fails to file their CIS return correctly, which means HMRC's records of your deductions do not match your statements. If this happens, contact HMRC with copies of your statements. You may also need to contact the contractor and ask them to correct their return.

What If You Are Also a Contractor?

If you both receive payments as a subcontractor and make payments to your own subcontractors, you have dual CIS obligations:

• As a subcontractor — report CIS deductions on your Self Assessment
• As a contractor — submit monthly CIS returns to HMRC and pay over the deductions you have made

These are separate obligations and are reported separately. Your own CIS deductions suffered go on your Self Assessment. The deductions you have made from your subcontractors' payments are reported through the monthly CIS return process.

How Accounted Simplifies CIS and Self Assessment

Keeping track of CIS deductions across multiple contractors and the entire tax year can be complex. Accounted handles it automatically:

• CIS deduction tracking — every deduction is recorded against the relevant payment
• Automatic totals — your total CIS deductions for the tax year are calculated in real time
• Expense capture via WhatsApp — snap receipts and Penny categorises them
• Tax estimate — see your projected refund or liability throughout the year
• Self Assessment data export — all the figures you need, ready when you file

Check our pricing to get started.

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Do not overpay HMRC by a single penny. Sign up for Accounted and make sure every CIS deduction is tracked, claimed, and refunded.