How CIS deductions work
If you work for a contractor in construction as a self-employed subcontractor, the contractor deducts tax from your pay before paying you: 20% if you're registered for CIS, 30% if you're not. They pass it to HMRC and give you a monthly payment and deduction statement.
The deduction is worked out on your labour only. Materials you bought for the job aren't deducted from.
These deductions are advance payments towards your income tax and National Insurance. They aren't the final word on what you owe.
Why you're often owed a refund
The 20% is taken from the first pound you earn. But the first £12,570 of your income is tax-free, and you pay tax on profit after expenses, not on everything you're paid.
So a subcontractor with modest earnings, or with real costs for a van, tools and travel, usually has more deducted than they owe. Months off between contracts make the gap bigger.
Example. Labour of £24,000 with £4,800 deducted, and £5,000 of expenses. Profit is £19,000. Income tax is £1,286 and Class 4 National Insurance £385.80, so the bill is £1,671.80. HMRC owes back £3,128.20.
Put your own figures into the tax calculator with your CIS deductions to see an estimate.
How to claim it back
- Collect every monthly payment and deduction statement for the tax year (6 April to 5 April).
- Add up your gross pay, the deductions and your business expenses.
- Fill in the self-employment section of your self-assessment return, entering the total CIS deductions in the box for them.
- File the return. If the deductions are more than your bill, HMRC repays the difference.
You can file as soon as the tax year ends on 5 April. There's no need to wait for January, and filing early gets a refund to you months sooner.
If you trade through a limited company, it works differently: the company reclaims deductions through its payroll submissions, not a personal tax return.
Registering for CIS
Register before you start work for a contractor, or they have to take 30% instead of 20%. You need your business name, your Unique Taxpayer Reference (UTR) and the date you started trading.
Watch out for refund firms
Some firms take a large share of your refund for filing a return you could send yourself. If you use one, check the fee before you sign, and make sure the refund is paid to you, not to them.
Common questions
How long does a CIS refund take?
Once your return is filed, HMRC usually repays within a few weeks, but checks can take longer. Filing soon after 5 April rather than waiting for January gets the money to you sooner.
I've lost some payment statements. Can I still claim?
Ask the contractor for copies; they have to give you one for every month they deducted tax. You can also see deductions in your HMRC online account.
Should I apply for gross payment status?
It stops deductions altogether, so you keep more cash during the year, but you then pay all your tax in one go through self-assessment. You need a track record of paying tax on time and enough turnover to qualify.
Sources
- What you must do as a Construction Industry Scheme (CIS) subcontractor, GOV.UK. Checked 2 Nov 2026
- Self-employed National Insurance rates, GOV.UK. Checked 2 Nov 2026
- Income Tax rates and Personal Allowances, GOV.UK. Checked 2 Nov 2026
- Expenses if you're self-employed, GOV.UK. Checked 2 Nov 2026
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