CIS Tax Refunds — 2025/26
If you work in construction as a CIS subcontractor, your contractor deducts either 20% (if you are registered) or 30% (if unregistered) from your labour payments. At the end of the tax year, you file a Self Assessment return. Your actual income tax and National Insurance due is then calculated, and HMRC refunds any over-deduction.
Average CIS refund: £1,500–£3,000 per year. The refund can be higher if you have significant business expenses or earned below the Personal Allowance (£12,570).
CIS Deduction Rates 2025/26
| Status | Rate | Notes |
|---|
| Registered subcontractor | 20% | Standard rate |
| Unregistered | 30% | Register with HMRC to reduce to 20% |
| Gross payment status | 0% | Available to qualifying businesses |
Frequently Asked Questions
What is a CIS tax refund?
A CIS refund is money returned by HMRC when your CIS deductions exceed your actual income tax and National Insurance liability for the year. You claim it through Self Assessment.
How do I claim my CIS refund?
File a Self Assessment tax return by 31 January following the tax year. Include all your CIS income and expenses. HMRC will calculate the refund and pay it directly to your bank account.
How long does a CIS refund take?
HMRC typically processes CIS refunds within 3–6 weeks of receiving your Self Assessment return, but it can take up to 12 weeks during busy periods.
Can I claim CIS expenses?
Yes — allowable CIS expenses include tools, materials (not recharged to contractors), mileage, PPE, training, phone, and a proportion of vehicle costs. Expenses reduce your taxable profit and increase your refund.
What is the CIS 20% rate?
The standard deduction rate for CIS-registered subcontractors. Register with HMRC for CIS at hmrc.gov.uk. Unregistered subcontractors pay 30%.
Can I get gross payment status?
Gross payment status means no CIS is deducted. To qualify you need a turnover over £30,000/year (net), a clean compliance record, and your business must be UK-based.
What if my contractor deducted too much?
This is common if you had expenses, a low profit year, or earned below the Personal Allowance. Your Self Assessment return will calculate the over-deduction automatically and HMRC will refund it.
Do I need an accountant for CIS?
Not legally required, but many CIS subcontractors use one as accountant fees are deductible and often pay for themselves through maximising allowable expenses.
Is CIS the same as IR35?
No — CIS applies to construction subcontractors. IR35 applies to contractors working through personal service companies. Some construction workers may be affected by both.
Can I backdate a CIS refund claim?
Yes — HMRC allows claims up to 4 tax years back. You can file outstanding Self Assessment returns for previous years and claim CIS refunds for each year.
What records do I need for a CIS refund?
Keep all CIS deduction statements (given by your contractors monthly), receipts for expenses, mileage logs, and bank statements showing income payments.
Does CIS apply to materials?
No — CIS is only deducted from labour payments. Materials are paid gross. However, if a contractor cannot separate labour and materials, they may deduct CIS from the total.