2 September 2026 · 6 min read · Bruce Thomas
Under the Construction Industry Scheme, contractors deduct tax from a subcontractor's labour before paying them and hand it to HMRC. Because those deductions ignore your personal allowance and your business costs, most subcontractors end up having paid more than they owe by the end of the tax year.
How the deduction is worked out
- 20% is deducted if you are registered under CIS
- 30% is deducted if you are not registered, or your details do not match HMRC's records
- Deductions apply to labour only, not to materials, VAT or plant hire that is billed separately
- Gross payment status, where available, means no deduction at all and you settle the tax yourself
Why a refund usually arises
The deduction takes no account of your personal allowance, your tools, your van running costs, your insurance, your protective clothing or your accountancy fees. Once those are reflected in a Self Assessment return, the tax actually due is normally well below what has already been taken.
Split the invoice properly and the effect is bigger again. Materials you supply should be shown separately so they are not subjected to the deduction in the first place.
What you need to claim
- Every monthly CIS payment and deduction statement from each contractor you worked for
- Your own invoices, with labour and materials shown separately
- Records of business costs: tools, materials, van, fuel, insurance, protective clothing, phone
- Your UTR and correctly matched name and National Insurance details
- Bank details for the repayment, entered on the return itself
Timing and common delays
The claim goes in with your Self Assessment return after the tax year ends on 5 April. Filing early in April, rather than waiting until January, usually means the money comes back months sooner.
The delays we see almost always come from missing deduction statements or a name or UTR that does not match HMRC's record. If a contractor has not sent your statements, chase them — they are legally required to provide them, and reconstructing the figures from bank credits alone takes far longer.
If you work through a limited company
Company CIS deductions are handled differently: they are set against your PAYE liabilities through the payroll system rather than repaid on a personal return. Getting that reclaim right through the year avoids a large sum sitting with HMRC unnecessarily.
This article is general guidance for business owners in the UK and does not amount to advice for your particular circumstances. Tax rules change and the right answer depends on your figures — please take specific advice before acting.
