If you work as a subcontractor in the construction industry, you’re almost certainly owed a tax refund. Contractors deduct 20% (or 30% if you’re not registered) from your pay and send it to HMRC — but that deduction is taken from your gross income, before your personal allowance, before your expenses, and before any other reliefs. The result is that most subcontractors overpay thousands of pounds every year and have to wait until they file their Self Assessment to get it back.
This guide walks through the refund process step by step: what documents you need, how to fill in your Self Assessment, how to claim in-year with form CIS40, what to do if you’ve lost your deduction statements, and how long the refund takes.
For the broader question of what CIS is and how it works, see our CIS for subcontractors guide. This article focuses specifically on the refund process.
Why CIS Subcontractors Overpay Tax
The Construction Industry Scheme requires contractors to deduct tax from your pay before they pay you. According to HMRC’s guidance on what you must do as a CIS subcontractor, these deductions are advance payments towards your tax — not your final tax bill.
The problem is that the deduction is a flat 20% (or 30% if unregistered) of your gross labour income, with no adjustment for:
- Your personal allowance (£12,570 in 2026/27 — you pay no income tax on the first £12,570 of income)
- Your allowable expenses (materials, tools, vehicle, insurance, etc.)
- Your personal circumstances (pension contributions, Gift Aid, other reliefs)
This means a subcontractor earning £40,000 gross with £10,000 expenses has a taxable profit of £30,000. After the personal allowance, the tax due is around £3,486. But CIS has already deducted £8,000 (20% of £40,000). The refund due is approximately £4,514 — money sitting with HMRC that belongs to you.
Step 1: Gather Your Documents
Before you file, you need three things:
CIS Payment and Deduction Statements
Every contractor you work for is legally required to give you a monthly payment and deduction statement showing:
- The gross amount they paid you
- The amount of CIS tax they deducted
- The amount they paid to HMRC on your behalf
- The materials cost (if they deducted it before calculating CIS)
According to HMRC’s CIS 340 guide, these statements are your proof of tax paid. Keep them all — you’ll need the totals for your Self Assessment return.
If a contractor hasn’t given you statements: chase them. It’s a legal requirement. If they refuse, contact HMRC on 0300 200 3210. HMRC holds records of all CIS deductions reported by contractors, so they can verify your claim even without the statements — but having them makes the process smoother.
Business Expense Records
Gather receipts and records for all your allowable expenses:
- Materials you paid for directly (these may already have been excluded from the CIS deduction by the contractor, but you still need to record them as expenses)
- Tools and equipment (capital allowances or the £1,000 trading allowance)
- Vehicle and travel costs (fuel, insurance, repairs, or simplified mileage at 45p/mile — see our car expenses guide)
- Protective clothing and safety gear
- Insurance (public liability, professional indemnity, tool cover)
- Professional fees (accountant, CIS registration)
- Office costs (phone, internet, stationery — business proportion only)
For the full list, see HMRC’s self-employed expenses guidance and our allowable expenses guide.
Personal Details
- Your Unique Taxpayer Reference (UTR) — if you don’t have one, register for Self Assessment and choose “working as a subcontractor”
- Your National Insurance number
- Your Government Gateway login — if you’re locked out, see our locked out of Government Gateway guide
Step 2: Fill Out Your Self Assessment Return
According to HMRC’s guidance, you report your CIS income and deductions on your Self Assessment return. Here’s exactly how:
Log in to your Government Gateway account
Go to HMRC’s Self Assessment portal and sign in. Start a new return for the tax year you’re claiming for.
Tailor your return
In the “Tailor Your Return” section, indicate that you are self-employed and had income from the construction industry. This opens the self-employment pages (SA103S for short-form, SA103F for full-form).
Enter your gross income
On the self-employment pages, enter your total gross income — the full amount you invoiced before any CIS deductions were taken. This is the figure from your payment and deduction statements, not the amount that hit your bank account.
For example, if you invoiced £40,000 and the contractor deducted £8,000 in CIS tax, you enter £40,000 as your turnover — not £32,000.
Enter your allowable expenses
Enter your total allowable business expenses. You can either:
- Claim actual expenses (materials, tools, vehicle, insurance, etc.) with receipts
- Claim the trading allowance of £1,000 if your actual expenses are below that amount — simpler, but you can’t claim both
See our allowable expenses guide for the full breakdown.
Enter your CIS deductions
There’s a specific box on the self-employment pages for CIS deductions. Enter the total CIS tax deducted by all your contractors during the tax year. This is the sum of all the deduction amounts on your monthly payment and deduction statements.
According to HMRC’s CIS 340 guide, CIS payments and deductions must be reported on the self-employed supplementary page (SA103S or SA103F) — not on the employment page (SA102), because CIS income is self-employment income, not employment income.
Step 3: Submit and Get Your Refund
How HMRC calculates your refund
When you submit your return, HMRC:
- Calculates your actual tax liability — income tax and Class 2/4 National Insurance on your taxable profit (gross income minus expenses minus personal allowance)
- Subtracts your CIS deductions from that liability
- If your deductions exceed what you owe, the excess is your refund
According to HMRC’s internal manual (CISR75020), HMRC automatically compares the deductions you’ve claimed against the deductions reported by your contractors. If there’s a mismatch, they may ask for evidence.
Submit your return
Submit your return online through your Government Gateway account. The system will show you whether you’re due a refund or have tax to pay.
Enter your bank details
After submitting, log back into your Government Gateway account and enter your bank details so HMRC can transfer the refund directly to you. If you don’t enter bank details, HMRC will send a cheque, which takes longer.
How long the refund takes
CIS refunds typically process within 4-8 weeks of submitting your return. HMRC needs to verify your deductions against contractor records before releasing the refund.
If your refund is delayed beyond 8 weeks, see our HMRC repayment delays guide for what to do.
Claiming In-Year with Form CIS40
You don’t have to wait until the end of the tax year to claim a refund. According to HMRC’s CIS40 guidance, if your accounting period has ended (your business accounts are prepared and your profit is known), you can claim an in-year repayment using form CIS40.
When you can claim in-year
You can claim in-year if:
- Your accounting period has ended and your business profit is known
- All your outstanding tax returns have been filed
- You have no tax or Class 4 NIC arrears (though CIS deductions can be set off against arrears, with any excess refunded)
- You hold your payment and deduction statements for the period
How to claim
Use the CIS40 online form for sole traders, or CIS41 for partners. You’ll need to provide:
- Your UTR and National Insurance number
- The date your accounting period ended
- Your gross business income (excluding VAT)
- Your total allowable expenses and capital allowances
- Your net business profit
- The total CIS deductions from your payment and deduction statements
- Any other income you’ve received since 6 April
According to HMRC’s internal manual (CISR75030), all in-year repayment claims must be made on form CIS40 or CIS41 — informal claims are only accepted in exceptional hardship cases.
When to use CIS40 vs Self Assessment
| Situation | What to use |
|---|---|
| Accounting period ended, claiming before 5 April | Form CIS40 (in-year) |
| After 5 April (end of tax year) | Self Assessment tax return |
| Business has ceased | Form CIS40 (cessation claim) |
| Partnership | Form CIS41 (all partners must sign) |
Worked Example: £40,000 Gross Income
Let’s walk through a concrete example to show how the refund is calculated.
Scenario: A registered CIS subcontractor (sole trader) works for three contractors during 2026/27. Their total gross income is £40,000, and total CIS deductions are £8,000 (20% of £40,000).
Step 1: Calculate taxable profit
- Gross income: £40,000
- Allowable expenses: £10,000 (materials, tools, vehicle, insurance)
- Taxable profit: £30,000
Step 2: Calculate tax liability
- Personal allowance: £12,570
- Taxable income after allowance: £30,000 - £12,570 = £17,430
- Income tax at 20% (basic rate): £17,430 × 20% = £3,486
- Class 4 NIC: £30,000 is above the Class 4 threshold (£12,570), so NIC is due at 9% on profits between £12,570 and £50,270
- Class 4 NIC: (£30,000 - £12,570) × 9% = £1,563
- Class 2 NIC: £3.80/week × 52 weeks = £197.60 (if profits exceed £12,570)
- Total tax and NIC: £3,486 + £1,563 + £197.60 = £5,246.60
Step 3: Calculate the refund
- Total tax and NIC due: £5,246.60
- CIS deductions already paid: £8,000
- Refund due: £8,000 - £5,246.60 = £2,753.40
The subcontractor receives £2,753.40 back from HMRC after filing their Self Assessment.
Why the refund varies
The refund depends on:
- Your expenses — higher expenses mean lower profit, lower tax, and a bigger refund
- Your other income — if you have a job as well, your personal allowance may already be used, which means more tax due on the CIS income and a smaller refund
- Your registration status — unregistered subcontractors have 30% deducted, not 20%, so the refund is larger but the cash flow hit is worse
What If HMRC Disputes Your Claim?
According to HMRC’s internal manual (CISR75020), when you claim CIS deductions on your Self Assessment return, HMRC automatically compares your claimed deductions against the deductions reported by your contractors. If there’s a mismatch, HMRC may:
- Ask you to provide evidence — your payment and deduction statements
- Give you a deadline to respond
- If you don’t respond or can’t provide evidence, adjust your claim based on the information HMRC has
- Prevent you from making further claims in that tax year
You can appeal HMRC’s decision. See our appeal an HMRC penalty guide for the appeals process.
Claiming for Previous Tax Years
If you’ve been working as a subcontractor but haven’t filed Self Assessment returns, you can claim back CIS deductions for up to 4 years after the end of the tax year in which the deductions were made.
| Tax year | Claim deadline |
|---|---|
| 2022/23 (ended 5 April 2023) | 5 April 2027 |
| 2023/24 (ended 5 April 2024) | 5 April 2028 |
| 2024/25 (ended 5 April 2025) | 5 April 2029 |
| 2025/26 (ended 5 April 2026) | 5 April 2030 |
File the Self Assessment return for each year you’re claiming for. If you’ve already filed but missed CIS deductions, you can amend the return within 12 months of the filing deadline — see our fixing mistakes on Self Assessment guide.
If you didn’t know you needed to register for Self Assessment, see our didn’t know I needed to register guide — you may be able to avoid penalties under HMRC’s special treatment for voluntary disclosures.
Avoiding the Refund Wait: Gross Payment Status
If you’re tired of having 20% deducted and waiting months for a refund, you can apply for gross payment status — where the contractor pays you the full amount with no deduction, and you handle your own tax.
To qualify, you need:
- £30,000+ turnover from the labour element of your construction work in the last 12 months
- A clean compliance record — all returns filed on time, all tax paid on time
- To have been in business for at least 12 months
With gross payment status, you receive 100% of your invoice and pay your own tax through Self Assessment — no deductions, no refund wait. See our CIS for subcontractors guide for the full gross payment status application process.
The Bottom Line
- Most CIS subcontractors are owed a refund because 20% is deducted from gross income before expenses and the personal allowance.
- Claim through Self Assessment — report gross income, expenses, and CIS deductions on the SA103S or SA103F pages. HMRC calculates the refund.
- Keep your payment and deduction statements — they’re your proof of tax paid. Chase contractors who don’t provide them.
- You can claim in-year with form CIS40 if your accounting period has ended and your profit is known.
- Refunds take 4-8 weeks after filing. Enter your bank details in your Government Gateway account for faster payment.
- You can claim for up to 4 years of unclaimed deductions by filing late Self Assessment returns.
- Gross payment status eliminates the refund wait — if your turnover is over £30,000 and you have a clean compliance record, apply.
- Don’t let missing statements stop you from filing — HMRC holds records of all CIS deductions and can verify your claim without them.
For the full comparison of self-employed business structures — sole trader, limited company, umbrella, and CIS — see our self-employed business structure hub.
For the broader CIS framework — registration, deduction rates, gross payment status, and MTD — see our CIS for subcontractors guide. For allowable expenses you can claim against CIS income, see our allowable expenses guide. For car and vehicle expenses specifically, see our car expenses guide. If your refund is delayed, see our HMRC repayment delays guide.