How do CIS tax refunds work?
Under the Construction Industry Scheme, contractors may deduct money from payments made to subcontractors and send those amounts to HMRC.
Those deductions are advance payments towards the subcontractor's tax and National Insurance position. They are not a separate tax and they are not necessarily the amount of tax the subcontractor ultimately owes.
A CIS refund can arise where the CIS deductions credited to you are greater than the Income Tax and National Insurance due after your final taxable business profit and wider tax position have been calculated.
What are the CIS deduction rates?
The rate used by a contractor depends on the tax treatment HMRC gives the subcontractor when the contractor verifies them.
| CIS status | Deduction rate | General position |
|---|---|---|
| Registered subcontractor | 20% | Standard deduction rate for a registered subcontractor paid under deduction. |
| Unregistered / unmatched | 30% | Higher deduction rate where the subcontractor cannot be matched appropriately by HMRC. |
| Gross payment status | 0% | The contractor pays without making CIS tax deductions. |
Why is 20% CIS not the same as paying 20% tax?
The CIS deduction is taken during the year before HMRC knows your final taxable business profit and overall tax position.
Your eventual tax calculation can take account of matters such as:
- Allowable business expenses.
- Your final self-employed profit.
- Personal allowances where available.
- Other taxable income.
- Income Tax already paid elsewhere.
- Class 4 National Insurance.
- Other relevant adjustments or liabilities.
CIS deductions are advance payments, not a guaranteed refund pot
Some subcontractors receive a repayment, some have little or no repayment due and others can still owe HMRC additional tax. The result depends on the completed tax calculation.
Why might a CIS subcontractor receive a tax refund?
One common reason is that CIS deductions are made from qualifying contractor payments during the year while the eventual tax bill is calculated on taxable profit after allowable business expenses.
If enough CIS has already been deducted to cover the eventual tax and National Insurance liability, an excess may be repayable.
Business expenses
Legitimate business costs can reduce taxable trading profit, subject to the normal self-employed expense rules.
CIS deducted throughout the year
Contractors may already have sent substantial deductions to HMRC on your behalf.
Personal tax position
Available allowances and other taxable income can affect the final calculation.
Final liability
HMRC compares the tax due with the CIS credit and other tax already paid.
Do allowable expenses increase a CIS refund?
Qualifying business expenses can reduce your taxable self-employed profit. A lower taxable profit can therefore affect the amount ultimately payable to HMRC.
Depending on your trade and circumstances, relevant costs may include qualifying:
- Tools and equipment.
- Business mileage and travel.
- Work-related vehicle costs.
- Business insurance.
- Phone and internet costs.
- Protective clothing and PPE.
- Professional costs.
- Other genuine business expenses.
They affect the profit calculation. The refund, if any, is the result of comparing the completed tax liability with the CIS deductions and other tax already paid.
Our dedicated CIS Tax Hub contains the separate expense guides in this CIS cluster.
CIS refund example
CIS deductions versus final tax liability
Suppose a subcontractor has £8,000 of valid CIS deductions credited for the year.
Final Income Tax and relevant National Insurance liability after the full tax calculation: £5,500
Illustrative excess: £2,500
In this simplified illustration, the £2,500 difference may be repayable, subject to HMRC's calculation, any other amounts due and verification of the CIS deductions.
Actual tax depends on profit, allowances, National Insurance, other income, tax already paid and the CIS deductions HMRC can verify.
How do sole traders claim CIS deductions through Self Assessment?
At the end of the tax year, a sole-trader subcontractor completes Self Assessment in the normal way.
HMRC says the subcontractor should report:
- The full amounts invoiced as business income.
- The deductions made by contractors in the appropriate CIS deductions field.
- Relevant allowable business expenses.
- Other income and tax information required by the return.
HMRC then works out the tax and National Insurance position and gives credit for the CIS deductions.
Your income is not simply what arrived in your bank account
If a contractor has deducted CIS before paying you, HMRC says sole traders should report the full invoice amounts as income and separately report the CIS deductions suffered.
What is a CIS Payment and Deduction Statement?
Where a contractor makes CIS deductions, they must provide the subcontractor with a Payment and Deduction Statement.
The statement provides evidence of matters including:
- The contractor.
- The subcontractor.
- The relevant tax period or payment.
- The gross payment.
- Relevant materials shown for deduction purposes.
- The CIS amount deducted.
Contractors must normally provide the statement within 14 days after the end of the tax month in which the payment was made.
Your Payment and Deduction Statements are important evidence when checking that the CIS credit in your records agrees with the amounts reported by contractors to HMRC.
What if a CIS deduction statement is missing?
If you have not received a statement, contact the contractor and ask for one.
HMRC allows a contractor to issue a duplicate statement where the original has been lost or did not reach the subcontractor. The replacement should be clearly identified as a duplicate.
Do not simply invent the deduction figure from the net amount received. CIS repayment claims can be checked against the contractor information held by HMRC.
Can an individual claim CIS back before the end of the tax year?
HMRC provides a current-year repayment procedure for individual self-employed subcontractors using form CIS40 where the relevant conditions are met.
After the tax year has ended, HMRC says the normal route for a self-employed subcontractor is to claim the deductions through the Self Assessment tax return instead.
A current-year CIS40 claim is a separate procedure and should not be treated as a routine way to obtain every year's CIS repayment early.
What if a contractor deducted CIS at 30%?
The 30% CIS rate is the higher rate used where the subcontractor is not appropriately matched as registered when the contractor verifies them with HMRC.
Registration can therefore be important because a properly registered subcontractor paid under deduction would normally be subject to the standard 20% rate rather than 30%.
It is still an advance CIS deduction
The higher deduction is still credited against the eventual tax position. If it exceeds the amount ultimately due, the excess may form part of a repayment.
What is CIS gross payment status?
A subcontractor with gross payment status can be paid by contractors without CIS deductions being taken from qualifying payments.
Gross payment status does not mean the income is tax-free. The subcontractor remains responsible for declaring the business income and paying the correct tax under the normal tax rules.
Do limited companies claim CIS refunds through Self Assessment?
This page primarily explains the position for individual self-employed subcontractors. A limited company subcontractor does not claim its CIS deductions through an individual's Self Assessment return.
HMRC has a separate company procedure involving the company's PAYE scheme and Employer Payment Summary. Any remaining excess at year end can be dealt with under HMRC's company CIS repayment process.
This distinction is important because being a construction subcontractor does not by itself tell you whether the sole-trader or company repayment procedure applies.
What records should a CIS subcontractor keep?
Good CIS records help support both the trading-profit calculation and the amount of CIS credit claimed.
Keep contractor statements
Retain each Payment and Deduction Statement showing the payments and CIS deductions made.
Keep your invoices
Keep copies of the full invoices issued rather than relying only on the net amounts received.
Keep expense evidence
Retain receipts, invoices, mileage records and other evidence supporting allowable business expenses.
Reconcile the totals
Check contractor statements against your invoices, bank receipts and bookkeeping before completing the tax return.
Reviewed & Updated
18 August 2026
2026/27
GO TAX REFUNDS
HM Revenue & Customs / GOV.UK
CIS deductions are advance payments towards tax and National Insurance and do not guarantee that a repayment will be due. The final position depends on taxable profit, allowable expenses, other income, tax already paid and the CIS deductions verified by HMRC.
CIS Tax Refund FAQs
Does every CIS subcontractor get a tax refund?
No. CIS deductions are advance payments towards your tax and National Insurance position. A refund arises only where the relevant credits exceed the amount ultimately due after the tax calculation.
What is the normal CIS deduction rate?
The standard rate is 20% for registered subcontractors paid under deduction. The higher rate is 30% for unregistered or unmatched subcontractors, while qualifying subcontractors with gross payment status are paid without a CIS deduction.
Is CIS tax taken from my profit?
No. Contractors make CIS deductions from qualifying payments under the CIS calculation rules. Your eventual Income Tax position is based on your taxable business profit after the relevant tax rules are applied.
Do expenses affect my CIS refund?
Qualifying business expenses can reduce taxable profit, which can affect the final tax liability. They do not guarantee that a refund will be due.
How do I claim CIS deductions at the end of the year?
Individual sole-trader subcontractors normally report their full business income and the CIS deductions suffered through Self Assessment. HMRC then gives credit for the verified deductions when calculating the final tax position.
Can I claim CIS back during the tax year?
HMRC provides a CIS40 current-year repayment process for individual subcontractors where the relevant conditions are met. Once the tax year has ended, the normal route is the Self Assessment return.
What if I have lost a CIS deduction statement?
Ask the contractor for another copy. HMRC guidance permits contractors to issue a duplicate statement where the original is lost or did not reach you.
Does gross payment status mean I pay no tax?
No. It means contractors generally pay you without making CIS deductions. You remain responsible for reporting the income and paying the tax due on your business profits.
HMRC & GOV.UK Sources
This guide is reviewed against current HMRC guidance covering CIS deductions, repayments and subcontractor reporting.
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