If you work in the construction industry as a subcontractor, there’s a decent chance HMRC owes you money.
That might sound like a bold claim, but it’s genuinely true for a large number of tradespeople across the UK every year. Under the Construction Industry Scheme, deductions are taken from your pay before you see it — and if those deductions add up to more than your actual tax bill, you’re entitled to a refund.
The problem is that the process for claiming it back is not always straightforward. Refunds get delayed, claims come back wrong, and some subcontractors never claim at all because they don’t realise they should.
This article explains clearly how CIS refunds work, what causes delays, and how to make sure you’re fully prepared when it comes to claim time.
What Is CIS and Why Do Refunds Happen?
The Construction Industry Scheme (CIS) is HMRC’s system for collecting tax from subcontractors who work in the construction sector. Instead of you paying tax directly to HMRC at the end of the year, your contractor deducts it from your payments first and pays it across on your behalf.
The deduction rates are:
- 20% if you’re registered under CIS
- 30% if you’re not registered, or HMRC can’t verify your details
- 0% if you hold gross payment status — meaning you’ve applied to receive your pay in full and settle tax yourself
The reason refunds arise is straightforward: the deductions taken throughout the year are a rough estimate of what you might owe, not a precise calculation. Once you complete your Self Assessment tax return and factor in your actual income, your allowable business expenses, and your personal tax allowances, your real tax bill may be significantly lower than the amount already deducted.
When that’s the case, HMRC owes you the difference back.
Our blog post on understanding the importance of CIS registration covers how the scheme works in more detail and why registration matters — including the difference between the 20% and 30% deduction rates.
Who Is Most Likely to Get a Refund?
Not every subcontractor will be owed money, but many are. You’re most likely to be due a refund if:
- You have significant business expenses that reduce your taxable profit — things like tools, materials, fuel, workwear, and phone costs
- You didn’t work all year, meaning your actual income was lower than the deduction rate assumed
- You pay into a pension, which further reduces your taxable income
- You’re taxed at the 30% rate because you’re not registered under CIS — this is particularly common because contractors sometimes deduct at the higher rate when they can’t verify a subcontractor’s details quickly
The further your actual tax liability is from what’s been deducted, the larger the refund tends to be.
How the Refund Process Works
CIS refunds aren’t automatic. You need to actively claim them — usually through your self-assessment tax return services. On your return, you declare your gross income from your CIS work, your allowable expenses, and the CIS deductions that have been made. HMRC calculates your actual tax liability, compares it against what’s been paid, and issues a refund for the difference.
The deadline for filing online is 31 January following the end of the tax year. So for the 2024/25 tax year (ending 5 April 2025), the deadline is 31 January 2026.
If you’re not yet registered for Self Assessment, you need to do that first — and the deadline to register is 5 October in the year after the tax year ends. Missing this can lead to penalties before you’ve even filed anything.
What Slows CIS Refunds Down?
This is where a lot of subcontractors run into problems. Even when a refund is due, it can take much longer than expected — or come back lower than it should. Here are the most common reasons why.
Missing or incomplete CIS statements. Your contractor should give you a CIS payment and deduction statement every time they pay you. These show exactly how much you were paid and how much was deducted. If you don’t have these statements, you can’t accurately report your deductions on your Self Assessment — and if you understate them, you’ll get less back than you’re owed.
Discrepancies between your return and the contractor’s submissions. Contractors submit monthly returns to HMRC showing the deductions they’ve made. If the figure you’re claiming doesn’t match what the contractor reported, HMRC will flag it. This triggers a check that can add weeks or months to the process.
Late or inaccurate Self Assessment filing. Filing late means HMRC won’t process your refund until after the penalty period, and an inaccurate return may prompt a compliance review. Our article on late tax returns and penalties is worth reading if you’ve already missed a deadline — the sooner you file, the better.
Not registering under CIS. If you’re still being deducted at 30% because you’re unregistered, you’re overpaying from the start. Sorting out your CIS registration won’t just reduce future deductions — it also means your historical returns are cleaner and easier to reconcile.
HMRC security checks. HMRC does check CIS refund claims, particularly larger ones. Having clean, well-organised records that match your contractor’s submissions makes it far easier to satisfy any questions they raise. Our guide to how an accountant helps during HMRC enquiries gives a good overview of what to expect if HMRC does look into your return.
How to Prepare Properly
Getting your CIS refund quickly and in full comes down to preparation throughout the year, not just at filing time.
Collect your CIS statements every time you’re paid. Don’t wait until January and hope the contractor still has them. If your contractor doesn’t provide them automatically, ask. Under CIS, they’re legally required to give them to you.
Reconcile your statements against your bank account. Check that the payments and deductions on your statements match what actually hit your account. Errors do happen — and spotting them early is far easier than trying to correct them after the fact.
Keep proper records of all your business expenses. Every item you claim as an expense reduces your taxable profit and, by extension, the amount of tax you owe. The bigger the gap between your deductions and your actual liability, the bigger your refund. Our small business bookkeeping services make it straightforward to track expenses throughout the year so nothing is missed.
Don’t leave it until the last minute. Filing early has real advantages — HMRC processes early returns more quickly, and if there are any issues with your figures, you have time to resolve them before the deadline.
Work with an accountant who knows CIS. The specifics of CIS accounting — how deductions are recorded, how expenses are treated, how to handle gross payment status — catch people out when they try to manage it themselves. Accountants for sole trader clients in construction is something we do regularly, and we know what HMRC expects to see.
CIS and Limited Companies
If you operate through a limited company rather than as a sole trader, the mechanics of a CIS refund are different. The deductions are made against the company rather than you personally, and the refund process goes through the company’s PAYE scheme rather than a personal Self Assessment return.
The company can offset CIS deductions against its PAYE liability — if the deductions exceed the PAYE owed, HMRC can repay the balance. This makes accurate record-keeping and timely submission of your annual company accounts especially important.
If you’re considering whether to incorporate, our article on setting up a limited company in the UK covers the pros and cons in straightforward terms. There can be tax advantages to operating through a company, but CIS adds a layer of complexity that’s worth getting right from the start.
How We Can Help
At Asmat & Co, we work with subcontractors across the construction sector — from sole traders to limited company directors — and CIS returns are something our team handles as part of a comprehensive service.
We reconcile your CIS statements, prepare and file your Self Assessment, ensure your deductions are correctly recorded, and follow up with HMRC if a refund is taking longer than it should. For clients using QuickBooks, we use it to keep CIS records organised in real time — as QuickBooks accountants Slough clients know, having your figures in one place makes everything far smoother.
We also work closely with contractors who need support with their own monthly CIS submissions — if you need to file returns as a contractor and stay compliant, our payroll accountant services cover this too.
If something has gone wrong with a previous return — whether you’ve claimed too little or made an error — our post on amending a tax return explains what you can do. And if you’ve got questions about the CIS for contractors compliance checklist your accountant will expect you to have in order, that’s worth reading before your next meeting.
We have offices in Slough, Reading, and Wednesbury. Whether you’re looking for reading accountants or support from our Slough base, the process is the same — clear advice, no hidden fees, and a response within three hours.
FAQs
How do I know if I’m owed a CIS refund? The simplest way is to compare the total CIS deductions shown on your payment statements against your estimated tax liability for the year. If you’re not sure how to work this out, an accountant can do it quickly. Many subcontractors are owed more than they expect.
How long does a CIS refund take? If you file on time with clean, accurate records, HMRC typically processes refunds within a few weeks of the filing date. However, larger refunds or those with discrepancies can take considerably longer. Filing early is the most reliable way to speed things up.
What if I’ve lost some of my CIS statements? You can ask your contractor to provide duplicates. If that’s not possible, HMRC’s online CIS verification service can sometimes help — and your bank statements can be used to cross-reference what you were actually paid.
Can I claim for past years I didn’t file? Yes, you can generally amend or file Self Assessment returns going back four years. If you’ve been working under CIS for several years and haven’t claimed, you could be owed a significant amount. It’s worth looking into.
What expenses can I claim as a CIS subcontractor? Allowable expenses typically include tools and equipment, protective clothing, vehicle costs (for business travel), materials you’ve purchased for the job, phone costs, and accountancy fees. You can’t claim for ordinary commuting or personal expenses.
Do I need to register for Self Assessment if I’m already under CIS? Yes. CIS deductions are made through the scheme, but your Self Assessment return is separate — it’s how you reconcile what’s been deducted against what you actually owe. If you’re a CIS subcontractor and haven’t filed Self Assessment, you may be missing out on refunds you’re entitled to.
Get Your CIS Refund Sorted — Without the Hassle
CIS refunds can make a real difference to your cash flow — but only if you claim them properly and on time.
Whether you’re a sole trader who’s been in the scheme for years or a limited company director getting to grips with CIS for the first time, we’re here to make sure your records are right, your returns are filed accurately, and your refund comes through as quickly as possible.
As chartered accountants in Slough with offices also in Reading and Wednesbury, we’re well placed to support subcontractors across the UK. And if you need broader financial support — from monthly financial reports to small business accountants Reading services — we can bring it all together under one roof.
