CIS tax refund: how to reclaim deductions from construction payments

In short

• CIS tax refund: deductions are an advance payment towards your tax and National Insurance, not final tax. Sole traders and partners reclaim any overpayment through Self Assessment; limited companies through an EPS or a refund claim.
• Rates (as of November 2026, GOV.UK): 20% if you are registered for CIS and the contractor can verify you; 30% if either of those does not apply; 0% with gross payment status.
• Statement: if the contractor has deducted CIS from your pay, they must give you a statement within 14 days of the end of the tax month. Keep it.
• Gross payment status (as of November 2026): turnover over 12 months, excluding VAT and the cost of materials, of at least £30,000 for a sole trader, plus other conditions.
• Paying what is left: pay any remaining tax by 31 January after the end of the tax year.

What CIS is and who it applies to

The Construction Industry Scheme (CIS) is a system in which a contractor deducts part of a subcontractor's payment and passes it to HMRC. The deductions count as advance payments towards the subcontractor's tax and National Insurance (GOV.UK, as of November 2026). Contractors must register for CIS; subcontractors do not have to.

• A CIS contractor may be a construction firm, government department or council paying subcontractors. Private householders are not CIS contractors. If you work for a contractor carrying out work for a householder, CIS applies to that contractor's payments to you.
• A subcontractor is anyone who does construction work for a contractor. If you are both, you register as both.

CIS covers most work on buildings and structures and civil engineering such as roads and bridges, including demolition, alterations, repairs, decorating and installing systems. You do not have to register if you only do certain jobs on the list of exceptions, for example architecture and surveying, carpet fitting, or delivering materials. CIS covers all construction work carried out in the UK, so it applies in Scotland, Wales and Northern Ireland too.

What is the CIS deduction: 20%, 30% or 0%?

Your CIS status decides the rate (as of November 2026, GOV.UK):

CIS 340 says the deduction rates may change; GOV.UK gives the current ones.

What the deduction is worked out on. Not the whole invoice. The contractor does not deduct CIS from the part of your invoice for VAT, materials you have paid for directly, plant hired for the job, and manufacturing or prefabricating materials. Travelling expenses (including fuel) and subsistence are included in the amount the deduction is taken from (CIS 340). HMRC examples from Appendix D:

How to register for CIS as a subcontractor

You should register for CIS if you work for a contractor and you are a sole trader, the owner of a limited company, or a partner in a partnership or trust. An employee does not register (GOV.UK, as of November 2026).

1. Get your details ready: your legal business name, your business's UTR, your VAT number (if you have one) and the date you started trading. Depending on your circumstances, also your National Insurance number, Company Registration Number or partner's details.
2. Register online. It is the quickest way and needs a UTR. If you are a sole trader without a UTR, register as a new business for Self Assessment and choose "working as a subcontractor": you will be registered for Self Assessment and CIS at the same time. If a limited company does not have its own UTR, register the company before registering it for CIS. We cover self-employment in our guide to working as a sole trader.
3. By post, if you cannot register online (separate forms for sole traders, partnerships and limited companies). You cannot register as a subcontractor over the phone.
4. Wait for the letter. HMRC confirms your registration by letter and tells you what details to give your contractors. Give them exactly the details you registered with (including your UTR and business name); if they cannot verify you, it can affect how much you are paid.

A construction skills card is a separate matter: we cover it in our guide to the CSCS card.

Statements and verification by the contractor

Verification is the process HMRC uses to make sure the correct rate of deduction is applied to a subcontractor's payments. The contractor does it in the free HMRC CIS online service or in CIS software (as of November 2026, CIS 340).

If CIS has been deducted from your pay, the contractor must provide a payment and deduction statement within 14 days of the end of the tax month, by the 19th (GOV.UK). A tax month runs from the 6th of one month to the 5th of the next. A statement is not compulsory for gross payments without deductions. If you do not get one, ask for it, and if the figures look wrong, sort it out with the contractor. Keep all your statements, because HMRC may ask for evidence of your deductions.

CIS tax refund: how to reclaim your deductions

Deductions are advance payments, so you report them to HMRC when you do your tax return. How depends on your business structure, and you need the statements from your contractor (GOV.UK, as of November 2026).

Sole traders and partners in a partnership: through Self Assessment

1. After the end of the tax year (6 April to 5 April), send in your Self Assessment tax return as usual. We cover the process in our step-by-step guide to Self Assessment.
2. Record your total pay before deductions as "income" and the total deductions as "CIS deductions". A sole trader does this on the self-employed supplementary page SA103S or SA103F; a partnership on the partnership return SA800 and each partner on page SA104S or SA104F. Do not put CIS on the employment page SA102.
3. HMRC works out how much tax you owe and takes off the deductions.
4. If you still owe tax, pay it by 31 January after the end of the tax year (for 2025/26 that is 31 January 2027). If you are due a refund, HMRC will pay the money back.

General rules are in our guide to income tax in the UK.

Limited companies: through payroll, not Corporation Tax

With the usual FPS, the company sends an Employer Payment Summary (EPS) showing total CIS deductions for the year to date. HMRC takes them off what the company owes, and the company pays the balance by the usual date. Do not use your Corporation Tax return to pay tax with your deductions, as you may get a penalty. Deductions left over after the end of the tax year are claimed back with a refund claim (as of November 2026, GOV.UK):

1. Wait until the tax year has ended. Before that you can only claim if the business has stopped trading or you have had deductions taken after changing to gross payment status.
2. File everything first: all FPS and EPS, monthly CIS returns (if the company is also a contractor) and Company Tax returns.
3. Work out the overpayment: total CIS deductions taken, minus tax paid using them (estimate if unsure), plus the company's PAYE reference number and Corporation Tax UTR.
4. Claim online (using the sign-in details linked to your Corporation Tax and PAYE accounts) or by post. For the past 6 tax years you can claim online or by post; for earlier years, by post only.
5. Wait for the decision. HMRC first uses your deductions to pay any overdue PAYE or Corporation Tax; you can get the rest as a refund or use it to pay VAT or upcoming Corporation Tax. HMRC will usually respond within 8 weeks.

Gross payment status: tests and thresholds

Gross payment status (GPS) means the contractor pays you in full, without deductions, and you pay all your tax and National Insurance at the end of the tax year. You must show HMRC that (as of November 2026, GOV.UK): you have paid your tax and National Insurance on time in the past, your business does construction work (or provides labour for it) in the UK, and it is run through a bank account.

HMRC also looks at your turnover for the last 12 months, ignoring VAT and the cost of materials. It must be at least: £30,000 for a sole trader; £30,000 for each partner in a partnership, or £100,000 for the whole partnership; £30,000 for each director of a company, or £100,000 for the whole company. If the company is controlled by five people or fewer, it must have annual turnover of £30,000 for each of those people.

A subcontractor must pass three tests: compliance, turnover and business. Since 6 April 2024 the compliance test also covers VAT obligations; minor VAT compliance failures are not taken into account (HMRC). HMRC reviews every year whether you can keep GPS: you must be on time with returns and payments, though a small amount of lateness is allowed. You have 30 days from the date of HMRC's letter to appeal against withdrawal of the status. If HMRC withdraws GPS following the annual review, you must wait a year from the cancellation date before reapplying.

CIS and employment status

CIS applies to workers who are self-employed under the terms of the contract, not to employees paid through PAYE (as of November 2026, CIS 340). The contractor decides the status when you are first engaged, under common law. Having worked as self-employed before does not settle the matter: it is the terms of the particular engagement that count.

If you are not sure, GOV.UK advises checking your employment status; we cannot decide it for you. Voluntary and community sector organisations, funded by HMRC, give free Self Assessment help and advice (GOV.UK). We cover workers' rights in our guide to employment rights in the UK.

Frequently asked questions

Do I have to register for CIS to work as a subcontractor?

No, but if you are not registered the contractor must deduct 30% instead of 20% (as of November 2026, GOV.UK). Employees do not register either.

When will I get my CIS tax refund?

Sole traders and partners: HMRC works out the overpayment once you have sent in your Self Assessment tax return for the tax year that has ended, and pays it back; the sources give no separate deadline. Limited companies: HMRC will usually respond to a refund claim within 8 weeks (as of November 2026, GOV.UK).

What if my contractor has not given me a deduction statement?

Ask your contractor; a statement is not compulsory for gross payments without deductions. If you cannot get your statements (for example, because the contractor's business has closed), write to HMRC: PT Operations, HM Revenue and Customs, BX9 1BX. Give your details and UTR, the contractor's details and the payment dates.

Where to get help

• HMRC CIS helpline: 0300 200 3210, from outside the UK +44 161 930 8706, Monday to Friday, 8am to 6pm, closed on bank holidays (as of November 2026, GOV.UK). It may ask you security questions, so keep your details up to date in your personal tax account.
• HMRC's digital assistant answers questions about CIS. Written questions about CIS and appeals against CIS penalties go by post to PT Operations, HM Revenue and Customs, BX9 1BX.
• Free Self Assessment help: HMRC funds voluntary and community sector organisations you can contact if you need extra support with your tax (GOV.UK).

This guide is general information. How CIS applies to you depends on your contract and business structure, so if in doubt, ask HMRC.