How can I reclaim Construction Industry Scheme (CIS) tax overpayments from HMRC?

To reclaim CIS tax overpayments, you need to complete a repayment claim through your company’s monthly payroll scheme. Ensure you don’t attempt to claim these deductions via your Corporation Tax return as this may incur penalties.

What is the process for a limited company to recover CIS tax deductions?

As a limited company, you can recover CIS tax deductions by submitting a repayment claim directly to HMRC. This typically requires documentation indicating the amounts deducted and proving that your company is registered under the CIS.

What are the allowable expenses I can claim as a CIS subcontractor to maximise my tax refund?

As a CIS subcontractor, you can claim various allowable expenses. These include car and van expenses, tools, equipment, and materials used for your work. Ensure that you keep accurate records and receipts for all expenses claimed.

How long typically does it take to receive a CIS tax refund after filing a claim?

The time to receive a CIS tax refund can vary. Generally, it may take between 4 to 8 weeks after your claim has been filed with HMRC for the refund to be processed and issued.

Can subcontractors claim CIS deductions without involving an agent, and if so, how?

Yes, subcontractors can claim CIS deductions without an agent. You can submit your repayment claim directly to HMRC using the correct forms and ensure all relevant documentation is attached.

In regards to CIS, what is the distinction between amounts suffered and amounts deducted?

In CIS terms, “amounts suffered” refers to the total tax deducted from your payments, while “amounts deducted” indicates the tax that HMRC acknowledges as being withheld. Understanding this distinction is crucial for accurate tax claims and refunds.

How Subcontractors Can Claim Back CIS Tax Deductions: A Step-by-Step Guide

If you work as a subcontractor in the construction industry, your contractors deduct Construction Industry Scheme (CIS) tax from your payments before passing it to HMRC. These deductions are not your final tax bill they are advance payments towards your tax liability for the year. In many cases, particularly where you have allowable business expenses, your actual tax bill will be lower than the total deducted, meaning you are owed a refund.

This guide explains how CIS deductions work, how refunds arise, and the different processes for reclaiming overpaid CIS as a sole trader versus a limited company.

Claim Your CIS Tax Refund Today

How CIS Deductions Work

Under CIS, when a contractor pays a subcontractor for construction work, they are required to withhold a portion of the payment and send it to HMRC. The rate depends on your registration status:

0% – gross payment status: if you qualify for gross payment status, you receive the full amount with no deduction
20% – registered subcontractor: the standard rate for subcontractors registered for CIS
30% – unregistered subcontractor: the higher rate applied if you cannot be verified by HMRC

The deducted amount is held by HMRC as an advance payment towards your income tax and National Insurance (if you are a sole trader or partnership) or your PAYE and corporation tax liabilities (if you are a limited company). These are not permanent tax payments – they are reconciled at the end of the tax year against your actual liability.

The term ‘CIS suffered’ refers to the total amount of CIS deductions made from your payments by contractors during the year. This is the figure you will need to record accurately when reclaiming any overpayment.

If you want to understand how contractors determine which rate applies to you and how these deductions are calculated in practice, read our guide on CIS deduction rates and how contractors can correctly calculate them.

How Refunds Arise

A refund arises when the total CIS deducted from your payments during the year is more than your actual tax liability for that year. This happens for two main reasons:

CIS is deducted on gross labour payments, without taking account of your business expenses. If your allowable expenses are significant – tools, fuel, vehicle costs, protective clothing – your taxable profit will be lower than your gross income, which means your tax bill will be lower than the CIS deducted
If you did not work for the full tax year, the total CIS deducted may exceed the tax due on a lower annual income

While you wait for your refund to be processed, managing the impact of CIS deductions on your day-to-day cash flow is essential. Read our guide on how subcontractors can manage their cash flow when facing CIS deductions for practical strategies to maintain financial stability throughout the year.

Worked Example

A sole trader subcontractor earns £40,000 in gross payments from contractors in 2025-26. CIS is deducted at 20%, so £8,000 is withheld.

The subcontractor’s allowable expenses are £12,000 (tools, van costs, fuel, and protective clothing). Taxable profit is therefore £28,000. After the £12,570 personal allowance, taxable income is £15,430.

Income tax at 20%: £3,086. Class 4 National Insurance on profits above £12,570: approximately £700. Total tax and NIC liability: approximately £3,786.

CIS deducted: £8,000. Refund due: approximately £4,214.

Without claiming the refund, this subcontractor would have overpaid by more than £4,000. Filing a Self Assessment return with all allowable expenses claimed is what generates the refund.

Check If You Are Due a CIS Refund

Route 1: Reclaiming CIS as a Sole Trader or Partnership

Sole traders and partners in a partnership reclaim CIS deductions through the Self Assessment tax return. The process is:

Register for Self Assessment with HMRC if you have not already done so
Collect all CIS payment and deduction statements from your contractors these show the gross payment, deduction made, and net amount received for each month
Record all your allowable business expenses for the year
Complete your Self Assessment return, entering your total CIS income, allowable expenses, and the total CIS deductions suffered

HMRC calculates your tax and NIC liability and offsets the CIS deductions against it. If the deductions exceed your liability, the difference is paid to you as a refund

The deadline for online Self Assessment is 31 January following the end of the tax year. Filing earlier is beneficial HMRC will process your refund more quickly than if you file in January.

You can claim overpaid CIS for up to four years after the end of the tax year in which the deductions were made. If you have missed claiming for previous years, it is worth reviewing whether a back claim is possible.

Route 2: Reclaiming CIS as a Limited Company

Limited company subcontractors do not reclaim CIS through their Self Assessment or Corporation Tax return. Instead, they offset CIS deductions suffered against their PAYE and National Insurance liabilities through the monthly Employer Payment Summary (EPS).

The process is:

Each month, submit your Full Payment Submission (FPS) as usual to report payroll
On your Employer Payment Summary (EPS), report the total CIS deductions suffered during that tax month
HMRC offsets the CIS suffered against your PAYE and NIC liability for that month. If the CIS suffered exceeds your liability, the balance carries forward to offset against the following month’s bill
If your company has excess CIS suffered that cannot be offset against PAYE/NIC during the year, you can apply to HMRC for a cash refund – this can be done online

HMRC processes refund claims for limited companies separately from PAYE settlement. For large excess balances, refunds can also be offset against VAT liabilities. Do not attempt to claim CIS deductions suffered through your company’s Corporation Tax return this is not the correct route.

Common Allowable Expenses for CIS Subcontractors

The more allowable expenses you can legitimately claim, the lower your taxable profit and the larger your potential refund. Common expenses for CIS subcontractors include:

Tools and equipment purchased for use on site
Van or vehicle costs either actual costs or the HMRC fixed rate mileage allowance
Fuel costs for travel to construction sites (not commuting to a regular workplace)
Protective clothing and safety equipment (clothing must be protective, not general workwear)
Public liability insurance
Accounting fees for preparing your tax return

Materials purchased for a specific job are also deductible, but only where they are not reimbursed separately by the contractor. Keep receipts for everything.

Get Expert Support on CIS Tax Reclaims

Optimise Your CIS Tax Return for Maximum Refund

Subcontractors working under the Construction Industry Scheme often have tax deducted at source, which can only be reclaimed through accurate reporting at year end. At Cigma Accounting, we support subcontractors in Farringdon, with nearby operations across Islington and Spitalfields, helping them ensure their CIS deductions are correctly recorded so they can recover any overpaid tax through their self assessment.

Missing information or incorrect records can delay repayments or result in underclaimed refunds, directly affecting cash flow throughout the year. With support from Cigma Accounting, and with physical offices across London, subcontractors can stay on top of their tax position and make sure their CIS returns are prepared accurately and efficiently.