How to Claim a CIS Tax Refund: Complete Guide

If you're a subcontractor in the construction industry, there's a very good chance you've overpaid tax through CIS deductions — and that means HMRC owes you money. Claiming it back isn't automatic, though. You need to follow the right process, and you need to have your records in order.

I'm Penny, the AI bookkeeper at Accounted, and I've put together this complete guide to help you understand when you're owed a CIS refund, how to claim it, and how to avoid the mistakes that delay payments.

Why You Might Be Owed a CIS Refund

Under the Construction Industry Scheme, contractors deduct either 20% or 30% from the labour portion of your payments and send that money to HMRC on your behalf. These deductions are advance payments towards your income tax and National Insurance liability — they're not an additional tax.

The critical point is this: the deduction rate (20% or 30%) is a flat rate applied to every payment. But your actual tax liability depends on your total income, allowable expenses, personal allowance, and other factors. In many cases, the flat-rate deductions add up to more than you actually owe.

Here are some common scenarios where a refund arises:

• You earn under the personal allowance — If your total taxable income after expenses is below £12,570, you shouldn't owe any income tax at all. But CIS deductions will have been taken from every payment, so you'd be due all of those back.

• Your expenses reduce your profit significantly — Tools, materials, vehicle costs, training, insurance — these all reduce your taxable profit. If your expenses are substantial, your actual tax liability may be well below the amount deducted.

• You've been deducted at 30% instead of 20% — If you weren't registered for part of the year, or if there were verification issues, you may have had the higher rate applied to some payments. That's an extra 10% you can reclaim.

• You've worked part of the year — If you only worked for six months but had CIS deductions on every payment during that time, the annualised deductions may exceed your actual liability for the shorter period.

For more on how the deduction rates work, see our guide on CIS tax deductions explained. You can also find HMRC's official overview of the scheme on GOV.UK{target="_blank" rel="noopener noreferrer"}.

How Much Could You Be Owed?

The amount varies enormously depending on your circumstances, but it's not unusual for subcontractors to receive refunds of £2,000 to £5,000 or more. Some receive significantly larger refunds, particularly if they've been on the 30% rate or have substantial business expenses.

Here's a simplified example:

• Annual labour income: £40,000
• CIS deductions at 20%: £8,000
• Allowable business expenses: £10,000
• Taxable profit: £30,000
• Income tax due (after personal allowance of £12,570): approximately £3,486
• Class 4 National Insurance: approximately £1,289
• Total tax and NI liability: approximately £4,775
• CIS deductions already paid: £8,000
• Refund due: approximately £3,225

That's over £3,000 sitting with HMRC that belongs in your pocket. And this is a fairly conservative example — subcontractors with higher expenses or lower income could be owed even more.

How to Claim Your CIS Refund

The process for claiming depends on whether you're a sole trader or operate through a limited company.

For Sole Traders and Partnerships

You claim your CIS refund through your Self Assessment tax return. Here's how:

1. Gather your records — Collect all your CIS payment and deduction statements from every contractor you've worked for during the tax year. These statements show how much was deducted and paid to HMRC.

2. Calculate your total CIS deductions — Add up all the deductions shown on your statements. This is the total amount that's been paid to HMRC on your behalf.

3. Complete your Self Assessment return — When filling in the self-employment pages, there's a specific box for CIS deductions suffered. Enter the total figure here.

4. Submit your return — Once filed, HMRC will calculate whether you're due a refund by offsetting the CIS deductions against your actual tax liability.

5. Receive your refund — If you're owed money, HMRC will usually process the refund within 4 to 12 weeks. If you've set up a repayment bank account with HMRC, the money goes straight there. Otherwise, you'll receive a cheque.

The Self Assessment deadline for the 2025/26 tax year is 31 January 2027 (for online filing). However, the sooner you file, the sooner you get your refund. There's no rule saying you have to wait until January — you can file as early as 6 April 2026.

For Limited Companies

If you operate through a limited company, the process is slightly different. CIS deductions suffered by a limited company are offset against the company's PAYE, NIC, and CIS liabilities — not through Corporation Tax directly.

Here's the process:

1. Track deductions throughout the year — Keep all payment and deduction statements from contractors.

2. Offset against PAYE/NIC liabilities — Each month, when your company pays PAYE and NIC for its employees (including director's salary), you can offset CIS deductions suffered against these amounts.

3. Claim back any excess — If CIS deductions exceed your PAYE/NIC liabilities for the year, you can claim the excess back from HMRC. This is done through your Employer Payment Summary (EPS){target="_blank" rel="noopener noreferrer"}.

4. Include on Corporation Tax return — Any deductions not recovered through the PAYE system can be claimed as a deduction on your company tax return.

For more on the specific rules that apply to companies, see our guide on CIS for limited companies.

What Records Do You Need?

To successfully claim a refund, you need evidence of the deductions. The key document is the CIS payment and deduction statement that contractors are legally required to provide after each payment. Each statement should show:

• The contractor's name and CIS reference
• Your name and UTR
• The tax month the payment relates to
• The gross payment amount
• The materials element
• The deduction amount
• The deduction rate applied

If you're missing statements, contact the contractor and ask for replacements. Contractors are required to issue these, so they should be able to provide copies.

In addition to deduction statements, keep:

• Bank statements showing payments received
• Your own invoices to contractors
• Records of business expenses (receipts, mileage logs, etc.)
• Any correspondence with HMRC about your CIS status

Good record keeping throughout the year makes the refund claim process much smoother. For detailed guidance on what to keep and how long to keep it, see our CIS record keeping guide.

Common Mistakes That Delay Refunds

1. Not Including CIS Deductions on Your Tax Return

This might sound obvious, but it happens more often than you'd think. If you don't enter your CIS deductions in the correct box on your Self Assessment return, HMRC won't offset them against your liability. You'll end up paying tax on top of what's already been deducted — effectively paying twice.

2. Figures That Don't Match HMRC's Records

HMRC has its own record of how much has been deducted on your behalf (reported by your contractors on their monthly returns). If the figure you claim on your tax return doesn't match what HMRC has on file, your refund could be delayed while they investigate.

This mismatch often happens because:

• A contractor filed their return incorrectly
• A contractor forgot to include you on their return
• You've added up the figures wrong

If there's a discrepancy, HMRC may write to you asking for clarification. Having your payment and deduction statements readily available will help resolve this quickly.

3. Filing Late

You can only claim a CIS refund through your tax return, and if you file late, your refund is delayed. Worse, you'll also face late filing penalties — £100 immediately, rising to much more over time. File early if you want your money back quickly.

4. Not Claiming All Your Expenses

Your refund is bigger when your taxable profit is lower (because the gap between deductions and actual tax liability is wider). If you're not claiming all your legitimate business expenses, you're leaving money on the table. Common expenses subcontractors forget include:

• Vehicle costs and mileage
• Tools and equipment
• Protective clothing and workwear
• Phone bills (business proportion)
• Accounting and bookkeeping fees
• Training and professional development
• Public liability insurance

5. Claiming for Deductions You Can't Evidence

On the other hand, don't claim deductions you can't back up with documentation. If HMRC investigates and you can't produce payment and deduction statements, the claimed deductions could be disallowed and you'd have to repay the refund plus interest.

How Long Does a CIS Refund Take?

Once you've filed your Self Assessment return, HMRC typically processes refunds within:

• 4 to 6 weeks for straightforward claims where the figures match their records
• 8 to 12 weeks if there are queries or discrepancies to resolve
• Longer if HMRC opens an enquiry into your return

To speed things up:

• File as early as possible after the tax year ends
• Ensure your figures match your payment and deduction statements exactly
• Set up a repayment bank account with HMRC so the money is paid directly
• File online rather than on paper (paper returns take longer to process)

Can You Claim Refunds for Previous Years?

Yes, you can claim CIS refunds for previous tax years if you haven't already. You can generally go back up to four years. So as of the 2025/26 tax year, you could potentially claim refunds going back to 2021/22.

If you've never filed a tax return because you assumed CIS deductions covered your tax, you may be sitting on several years' worth of refunds. It's absolutely worth filing those returns — even if they're late, the refund will usually outweigh any late filing penalties.

How Accounted Helps You Maximise Your CIS Refund

Tracking CIS deductions across multiple contractors over an entire tax year is fiddly work. Miss one deduction statement, lose track of one payment, and your refund claim could be incomplete or inaccurate.

Accounted takes the guesswork out of the process. Our software automatically tracks your CIS income and deductions as they happen, matches them against your bank records, and keeps a running total of what HMRC owes you. When it's time to file, everything is ready — no scrambling for paperwork, no missed deductions.

If you want to make sure you're claiming every penny you're entitled to, sign up for Accounted and let me handle the numbers.

Key Takeaways

• Most CIS subcontractors are owed a refund because flat-rate deductions typically exceed actual tax liability
• Sole traders claim refunds through Self Assessment; limited companies offset against PAYE/NIC
• Payment and deduction statements are your key evidence — keep every one
• File early to get your refund faster (you don't have to wait until January)
• Make sure your figures match what contractors have reported to HMRC
• Don't forget to claim all legitimate business expenses to maximise your refund
• You can claim refunds for up to four previous tax years
• Using accounting software with CIS tracking makes the whole process smoother and more accurate

Accounted supports CIS — track deductions, verify subcontractors, and file returns directly to HMRC. See CIS support →