CIS Tax Refunds — How to Claim Back Overpaid Tax

If you work as a subcontractor in the construction industry, there is a very good chance you have overpaid tax through the Construction Industry Scheme. CIS deductions are taken from your pay before you even see it, and for many subbies, those deductions add up to more than the actual tax owed at the end of the year. The good news? You can claim that money back. In this guide, we will walk you through exactly how CIS tax refunds work, when you are entitled to one, and how to make sure you get every penny you are owed.

Why Do Subcontractors Overpay Tax?

The CIS works by requiring contractors to deduct tax at source from payments made to subcontractors. If you are registered with HMRC under CIS, the standard deduction rate is 20%. If you are not registered, it jumps to 30%. These deductions are treated as advance payments towards your income tax and National Insurance bill for the year.

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The trouble is, the 20% (or 30%) deduction is applied to your gross payment minus the cost of materials. It does not take into account your personal allowance of £12,570, your other allowable expenses, or your actual profit margin. That means most subcontractors end up having more deducted throughout the year than they actually owe.

For example, say you invoice £50,000 over the tax year and £5,000 of that is materials. The contractor deducts 20% of the remaining £45,000, which comes to £9,000. But after claiming all your legitimate business expenses — van costs, tools, insurance, phone, fuel, and so on — your actual taxable profit might only be £28,000. With a personal allowance of £12,570, you would only owe income tax on £15,430. At the basic rate of 20%, that is just £3,086 in tax, plus your Class 2 and Class 4 National Insurance. You have had £9,000 deducted but might only owe around £5,000 in total. That is roughly £4,000 sitting with HMRC that belongs to you.

How to Claim Your CIS Tax Refund

Claiming back overpaid CIS tax is not a separate process — it happens through your Self Assessment tax return. Here is how it works step by step.

First, you need to make sure you have all your CIS payment and deduction statements. Every time a contractor pays you, they should give you a statement showing the gross amount, any deduction for materials, and the CIS deduction taken. These are your proof of tax already paid, so keep them safe. If you have lost any, you can ask the contractor for copies, or HMRC can sometimes provide records of deductions made against your UTR.

Second, you need to register for Self Assessment if you have not already. As a self-employed subcontractor, you should already be registered, but if you are new to the trade, make sure you get your Unique Taxpayer Reference (UTR) sorted as early as possible.

Third, complete your Self Assessment tax return for the relevant tax year. On the self-employment pages, you will enter your total income, your allowable expenses, and on the CIS deductions page, the total amount deducted by contractors during the year. HMRC will then calculate your actual tax liability and offset the CIS deductions against it. If the deductions exceed what you owe, the difference is your refund.

Finally, once HMRC processes your return, your refund will usually be paid within a few weeks. You can choose to have it paid directly into your bank account, which is the quickest option. If you also have payments on account due for the following year, HMRC may offset part of your refund against those instead.

Tools like Accounted make this whole process much simpler by automatically tracking your income, expenses, and CIS deductions throughout the year, so when it comes to filing your return, most of the hard work is already done.

What Expenses Can You Claim to Increase Your Refund?

The bigger your legitimate expenses, the lower your taxable profit, and the larger your refund. Many subcontractors miss out on claiming everything they are entitled to. Here are some of the most common allowable expenses for CIS subcontractors:

• Tools and equipment — drills, saws, hand tools, PPE, hi-vis clothing, safety boots
• Vehicle costs — fuel, insurance, road tax, MOT, repairs, or you can use the simplified mileage rate of 45p per mile for the first 10,000 miles and 25p after that
• Materials — anything you supply yourself that is not already deducted on the contractor's CIS statement
• Phone and internet — the business proportion of your mobile and broadband costs
• Insurance — public liability, professional indemnity, tool insurance
• Accountancy and software fees — including bookkeeping apps like Accounted
• Travel and subsistence — accommodation and meals when working away from your normal base
• Training — courses that update or maintain your existing skills (not ones that teach a brand-new trade)
• Workwear — protective or branded clothing, but not ordinary clothes you could wear outside work
• Use of home — if you do admin from home, you can claim a proportion of household bills or use HMRC's simplified flat rate

The key is to keep records of everything. If you cannot prove an expense, you cannot claim it. Using an app like Penny — the AI bookkeeping assistant within Accounted — to snap photos of receipts and categorise expenses as you go makes this far less painful than trying to reconstruct a year's worth of spending in January.

For a deeper dive into what deductions mean in practice, have a look at our CIS subcontractors deductions guide.

When Will You Get Your Refund?

The timing of your refund depends on when you file your Self Assessment return. The tax year runs from 6 April to 5 April, and you have until the following 31 January to file your return online. However, there is nothing stopping you from filing as soon as the tax year ends.

If you file your return in April or May, you could have your refund within a few weeks — sometimes as quickly as five to ten working days if you file online and choose direct bank payment. If you wait until the January deadline, HMRC is swamped with millions of returns and it can take longer. There is also the risk of penalties if you miss the deadline altogether: an automatic £100 fine for being even one day late, rising to daily penalties and eventually percentage-based charges on the tax owed.

Filing early has another benefit. If your return shows a refund, you get your money sooner. If it shows tax to pay, you have months to plan for it rather than facing a surprise bill in January.

Common Mistakes That Delay CIS Refunds

Several issues can slow down or reduce your refund. Watch out for these:

Not declaring all your CIS deductions. If you forget to include deductions from one contractor, you are effectively leaving money on the table. Cross-check your records against your bank statements to make sure everything matches.

Mismatched UTR numbers. If a contractor has recorded your UTR incorrectly, HMRC may not match the deductions to your record. Verify your UTR with every contractor you work for.

Failing to claim all expenses. This is the big one. If you only claim materials and fuel, you are almost certainly missing out. Go through the full list of allowable expenses and claim everything you are entitled to.

Not being registered for CIS. If you have been suffering 30% deductions because you never registered, you have been paying significantly more than necessary. Register as soon as possible — the process is straightforward and is explained in our CIS registration guide. Even if you have overpaid at 30%, you can still claim the excess back through Self Assessment.

Outstanding tax returns. HMRC may withhold your refund if you have older tax returns that have not been filed. Make sure you are up to date with all previous years before expecting a refund for the current one.

Can You Claim Refunds for Previous Years?

Yes, you can. If you did not file a tax return for a previous year, or you filed one but did not include your CIS deductions, you may be able to make a claim going back up to four years. You would need to either file the missing return or amend a previously submitted one.

This is surprisingly common. Some subcontractors assume the CIS deductions are just a tax they have to pay and never file a return to claim the difference. If that sounds familiar, it is worth looking into — refunds of several thousand pounds are not unusual when multiple years are involved.

For a broader overview of how the scheme works and your obligations as a subcontractor, our CIS subcontractors guide covers everything you need to know.

Related Reading

• CIS Compliance Checks — What HMRC Looks For

• Domestic Reverse Charge VAT for Construction — Practical Guide

• Fence Builders and Installers — CIS and Tax Guide

• CIS Subcontractors Guide — Everything You Need to Know

• CIS Deductions Explained for Subcontractors

• How to Register for CIS — Step by Step

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