Subcontractors working under the Construction Industry Scheme (CIS) often end up paying more tax than they owe. This happens because the upfront CIS deductions are calculated at a set rate, without accounting for any expenses incurred throughout the year.
When relevant costs—such as tools, safety equipment, fuel, and travel between sites—are considered, the actual tax liability is usually lower, which could even qualify the subcontractor for a refund. This guide aims to provide a comprehensive overview of how subcontractors can claim CIS refunds, identify eligibility criteria, outline claimable expenses, and ensure that tax returns are submitted accurately in compliance with HMRC regulations.
What Is a CIS Tax Refund?
This amount is refunded by HMRC when the tax deducted at source exceeds your actual liability. Subcontractors registered under CIS usually have 20% withheld, while unverified subcontractors may face a 30% deduction. Because these deductions happen before accounting for business expenses, many subcontractors end up overpaying their taxes.
After you submit your self-assessment, HMRC will review your return and determine your actual tax liability. If the CIS deductions made during the year are more than what you owe, the surplus will be refunded to you.
Allowable Expenses for CIS Subcontractors
HMRC allows a wide range of business expenses to be claimed against your income. These reduce your taxable profit and help determine the refund you are entitled to receive.
Tools and Equipment
These are allowable if they are wholly and exclusively for your work:
- hand tools and power tools
- accessories such as blades, batteries and leads
- costs of repairs, maintenance or replacement of tools
Protective Clothing (PPE)
HMRC allows the cost of protective and specialist clothing required for your work, such as:
- safety boots
- gloves
- helmets
- high-visibility clothing
- specialist protective equipment
Travel Between Sites
You may claim the cost of travel between sites or temporary workplaces, including:
- mileage for business travel (using HMRC’s approved mileage rates)
- fuel costs (if not using mileage rates)
- public transport costs for site-to-site travel
- parking fees and toll charges
Use of Home for Business
If you carry out administrative tasks at home, you can claim a reasonable proportion of household running costs that relate to business use, including:
- broadband
- electricity and heating
- phone usage
- stationery and office supplies
Insurance and Professional Fees
Allowable costs include:
- public liability insurance
- trade or professional memberships
- union fees
- accountancy fees related to your Self Assessment
Materials and Consumables
These are allowable when purchased for work and not reimbursed by the contractor, such as:
- screws, fixings and fasteners
- adhesives and sealants
- small job-related materials and consumables
Proper record-keeping is crucial. Receipts, mileage logs, and invoices provide evidence to support your claims if HMRC requests documentation.
How to Claim a CIS Tax Refund
Most CIS (Construction Industry Scheme) workers reclaim overpaid tax through self-assessment. To do this, you should gather your CIS statements, record all the income you received, and collect evidence of your allowable expenses. Complete your self-assessment return by declaring your income, CIS deductions, expenses, and any personal allowances. Once you have submitted your return to HMRC, they will process it and verify it against contractor records. If everything checks out, HMRC will issue any refunds directly to your bank account.
CIS Refunds and Making Tax Digital (MTD)
The implementation of Making Tax Digital (MTD) for Income Tax will soon affect subcontractors, who will be required to retain digital records and submit quarterly reports.
Key Dates
- April 2026: Sole traders and landlords with qualifying income over £50,000
- April 2027: Sole traders and landlords with qualifying income over £50,000
It is recommended to commence the digitalisation of receipts, mileage logs, and CIS statements presently, as this measure will facilitate a smoother transition to quarterly reporting following the implementation of the new regulations.
Why Subcontractors Use an Accountant
While completing your return yourself is possible, many subcontractors opt for professional support to ensure:
- Ensures every eligible expense is claimed.
- Provides accurate matching of income and CIS statements.
- Helps minimise inquiries from HMRC.
- Speeds up processing times.
- Offers reliable and organised record-keeping.
- Supports subcontractors with MTD preparation.
How Does The Infinity Group Help?
At The Infinity Group, we assist subcontractors at every stage, ensuring that your tax returns are accurate, comprehensive, and reflect all allowable business expenses. We handle all tasks meticulously and efficiently, enabling you to focus on your work while confidently relying on the full compliance of your tax affairs.
Practical Tips for a Smooth Refund
- Keep all receipts
- Use an app to track mileage daily
- Promptly request any missing CIS statements
- Store records digitally in preparation for MTD
- Avoid estimating expenses
- Keep business and personal spending separate
Frequently Asked Questions
Can I claim mileage if I use my own vehicle?
Yes—travel between job sites is allowable, but travel from home to your first job is not.
Can I claim a refund if I worked under both CIS and non-CIS jobs?
All income is reported on your tax return, and CIS deductions are incorporated into the overall tax calculation. Your refund depends on your total earnings and allowable expenses.
How do I prepare for MTD?
Begin storing your receipts in a digital format and keep accurate mileage logs and CIS statements to make upcoming quarterly submissions easier once the new regulations come into effect.