Construction industry subcontractors in the UK typically pay income tax through the Construction Industry Scheme (CIS). CIS operates a lot like the PAYE scheme, used by other UK employers to withhold tax and National Insurance contributions for their employees. As a self-employed subcontractor in charge of submitting your own tax return, however, there’s always a good chance you end up paying more than you need to, which might mean it’s time to claim a CIS refund.
As a long-time member of the UWM Accountants team, I’ve accrued many years of professional experience delivering friendly tax advice to local subcontractors and their businesses throughout Yorkshire and the northeast. In this guide to claiming your CIS tax rebate, I’ll explain how to know when you’ve paid too much tax, as well as how to get it back.
Contents
- How to know when you’re due a CIS tax rebate
- How to claim a CIS refund
- Conclusion
- Frequently asked questions (FAQs)
How to know when you’re due a CIS tax rebate
How do you know if you’ve paid too much CIS and need to claim some CIS tax back? A little later in this guide, I’ll show you how to calculate your CIS overpayments step-by-step. For now, though, here are some common indicators that you might be eligible for a CIS tax rebate:
- Earning <£50,270 per year: CIS does not account for our personal tax-free allowance of £12,570, meaning you’ve probably paid tax on this allowance, which you can now claim back. Once you enter the Higher Rate tax bracket of £50,271+ annual income, however, your tax rate doubles to 40%, meaning any tax technically paid on your tax-free earnings will likely go to covering the higher-rate shortfall.
- Working for only part of the year: Similar to the above, if you only work as a subcontractor part of the year, and do PAYE or non-construction work the rest of the year, there’s a good chance you’ll end up paying more CIS than you need to, and so could claim some of it back.
- Having high allowable expenses: If you have a lot of business expenses as a subcontractor (for example, for tools and equipment, travel and accommodation), then you will be able to deduct some or all of these from your gross income before calculating tax. Because CIS payments are withheld from your gross income before any of these allowable expenses are deducted, subcontractors with higher expenses are more likely to be owed some of their CIS tax back.
A look at what you can claim back from your CIS tax payments
As I’ve just mentioned, it’s not just tax overpayments that necessitate CIS rebates—it’s also having high expenses. HMRC allows self-employed people and businesses to claim certain expenses against their gross income, before calculating tax. These expenses can include:
- Advertising and marketing expenses
- Purchase, lease, petrol and maintenance of a company vehicle
- Training course costs
- Office and uniform costs
- Costs of running your business premises and/or website
Example
Andy earns £40,000 as a CIS-registered subcontractor in 2026/27. The dozen or so contractors Andy has worked with this year withheld 20% of his pay each time they issued a payslip, meaning that by the end of the year, Andy had already paid HMRC £8,000 in tax.
Like everyone else in the UK, Andy gets the first £12,570 of his income tax free, meaning that he only actually needs to pay income tax on £27,430. As a Basic Rate taxpayer, Andy owes 20% on £27,430 = £5,486. Having already paid £8,000, Andy is due £2,514 of his CIS tax back.
However, Andy also has allowable expenses he can claim against his income before paying tax. These expenses include the petrol it took to run his work van, some new equipment he bought for work, and the cost of hiring a personal accountant to help him with his work taxes. All in, Andy’s allowable expenses are £7,430, bringing his taxable income total down to £20,000. At 20% income tax, Andy’s 2026/27 tax liability on £20,000 taxable earnings is £4,000. Having already paid £8,000, Andy is due £4,000 CIS tax back.
How contractors calculate your CIS contributions
We noted above that contractors usually withhold 20% of registered subcontractors’ pay as their CIS contribution. But did you know that in the case of unregistered subcontractors, contractors are legally obliged to withhold 30% of their pay instead? Here’s how contractors work out how much to take as CIS from a subcontractor’s pay packet:
The contractor takes the total amount of your invoice (your ‘gross pay’) and deducts any work expenses which you have directly paid for from the invoice (i.e., fuel costs, VAT, consumable stores, plant hire, etc.). Finally, the contractor deducts the last percentage of pay as your CIS contribution. This percentage depends on your status:
- CIS-registered subcontractors have 20% of their net invoice deducted before pay
- Unregistered subcontractors have 30% of their net invoice deducted before pay
- Subcontractors with ‘gross payment’ status have 0% of their net invoice deducted before pay
‘Gross payment’ status for subcontractors
Having ‘gross payment’ status means that the contractors you work with pay you in full, without making any deductions on your behalf. Instead, you pay all your own tax and National Insurance contributions yourself, at the end of each fiscal year.
To achieve ‘gross payment’ status, you’ll need to be earning at least £30,000pa as a sole trader in construction—or £30,000pa per director of your company—and be able to prove to HMRC that you have a track record of paying tax and NI on time in the past.
How to claim a CIS refund
As you can see from the examples above, there are lots of scenarios in which you might have been overcharged CIS and are therefore eligible to claim a CIS refund. But how exactly? Let’s take a look.
Eligibility: Who can claim CIS refunds & what you need to make one
First things first, it’s important to note that not everyone can claim CIS tax back. You have to be CIS-registered for a start, in order to pay CIS tax and thus potentially qualify for a CIS tax rebate. Here’s a short list of other things you’ll need to have on hand before making your Construction Industry Scheme claim:
- Your company files, including name, registered address and contact information (phone number and email address).
- Your personal PAYE/CIS reference number.
- Your company’s tax reference number.
- An estimate of how much CIS you believe you’ve overpaid, as accurately calculated as possible.
- Your bank details.
Calculating and claiming your CIS tax back: online or by post
Making a CIS refund claim is fairly straightforward, and can be done either online via HMRC’s Self-Assessment ‘returns and refunds’ section, or by post using a paper Self-Assessment form. First, though, you’ll need to know how to calculate the overpayment you’re claiming for.
How to calculate your CIS overpayment
The best way to calculate any potential overpayment of CIS is to compare the CIS tax you’ve actually paid in a given tax year to the amount of tax HMRC says you need to pay. You can do so easily through HMRC’s Self-Assessment online portal.
Step one) Collect your payslips
Use your payslips from the tax year in question to add up all of the CIS payments withheld from your earnings, as well as your total income. Write down these two totals.
Step two) Keep track of your expenses
Keep a clear, accurate record of all of your allowable business expenses. Add these up across the tax year and write down the total.
Step three) Work out your taxable income for the year
Take the amount of money you earned from subcontracting this year and deduct your personal tax-free allowance of £12,570 from the total. Next, deduct your total amount of allowable expenses from this number. The number you’re left with is your ‘taxable income’.
Step 4) Calculate the tax you should owe on your taxable income
Using HMRC’s table of income tax bands and rates, work out how much tax you owe on this year’s income.
If your total taxable income is less than £50,270, you’ll pay 20% tax on it. If your total taxable income is more than £50,271, you’ll pay 20% tax on the first £50,270, 40% on income between £50,271 and £125,140, and then 45% on anything above that.
For example, if you have a total taxable income of £50,270, you’ll owe HMRC £10,054 in tax. If you have a total taxable income of £60,000, however, you’ll owe the same £10,054 (20% of £50,270) as well as an additional £3,892 (40% of the remaining £9,730 taxable income).
Step 5) Compare your CIS payments to your tax owed
Lastly, it’s time to compare our two final numbers: your total CIS payments for the tax year against the tax you should owe.
If you have paid more CIS than tax owed, you are due a refund of the excess. For example, if you paid £15,000 in CIS in 2026/27 but only owe £12,000 in tax, you can claim a CIS refund to the tune of £3,000.
Of course, if it turns out that you owe more tax than the amount of CIS you’ve paid, you cannot make a refund claim, but will instead have to pay the remaining tax after submitting your tax return.
Conclusion: Claiming CIS refunds as a UK-based subcontractor
It’s quite common for CIS-registered subcontractors to pay more tax than they owe. Since 20% of every invoice is withheld from your pay, you might end up paying tax even on portions of income which should be tax-free.
Making a refund claim through HMRC is how a subcontractor can ensure they are repaid properly, and in full, for any CIS overpayments. Doing so is pretty easy; it’s making the right calculations, which can throw a spanner in the works.
As a busy construction worker, time is a valuable resource, which means doing the accounting might be quite far down your to-do list. For sound, helpful advice on how to get the most out of your CIS tax rebate, or to ensure you don’t overpay CIS in the first place, consider reaching out to your trusted local accountants.
