CIS Tax Refund: How Subcontractors Claim Back Overpaid Tax
If you’re a CIS subcontractor, there’s a good chance HMRC is currently holding some of your money. CIS deductions are calculated on your gross payments, before your business expenses and personal allowance are taken into account u2014 which means most subcontractors end up overpaying tax during the year. This guide from Filing Accounts UK explains exactly how to claim it back, using only verified facts from official HMRC guidance.
At Filing Accounts, we help CIS subcontractors and construction companies claim back overpaid CIS deductions. Official guidance is available at GOV.UK: Claim a refund of CIS deductions. For how CIS registration itself works, see our CIS registration guide.
Why Subcontractors Overpay Tax Under CIS
CIS deductions (20% for registered subcontractors, 30% if unregistered) are taken from your gross payments before you receive them. They don’t account for your personal allowance, allowable business expenses, or other tax reliefs at the point of deduction. Once your actual tax liability is calculated u2014 after expenses and allowances u2014 many subcontractors discover they’ve paid in more than they actually owe. The difference is your refund.
Common expenses that reduce your taxable profit, and therefore increase the size of a likely refund, include tools and equipment, travel and vehicle costs, protective clothing, and materials you’ve paid for yourself.
How Sole Traders and Partnerships Claim a Refund
If you operate as a sole trader or partner, you claim your CIS refund through your annual Self Assessment tax return:
- Gather your payment and deduction statements from every contractor you worked for during the tax year
- Add up the total CIS deductions suffered across all contractors
- Enter this figure in the specific CIS deductions box on the self-employment pages of your Self Assessment return
- HMRC calculates your actual liability after expenses and allowances, and refunds any excess
Refunds are normally only processed after the tax year ends on 5 April. Filing early u2014 well before the January rush u2014 typically means a faster refund, often within a few weeks, compared to a longer wait for returns filed close to the 31 January deadline.
How Limited Companies Claim a Refund
Limited company subcontractors follow a completely different process u2014 they cannot claim CIS deductions back through Self Assessment, and cannot offset them directly against Corporation Tax either.
Instead, CIS deductions suffered are offset against the company’s own PAYE and National Insurance liabilities, declared each tax month through the company’s Employer Payment Summary (EPS):
- Each month, the company reports CIS deductions suffered via its EPS, supported by the payment and deduction statements from each contractor
- HMRC offsets this against the company’s PAYE and NIC bill for that period
- If CIS suffered exceeds the PAYE/NIC liability, the surplus carries forward within the tax year
- At the end of the tax year, any remaining balance can be claimed as a repayment, and can be set against Corporation Tax owed if requested
Claims made before 5 April risk being incomplete, since not all deductions for the year may yet be recorded u2014 this can delay processing or result in an incorrect repayment amount.
Refund Process at a Glance
| Business Type | How to Claim | Timing |
|---|---|---|
| Sole trader / partnership | Self Assessment tax return | After the tax year ends (5 April) — file early for faster refunds |
| Limited company | Offset via monthly EPS against PAYE/NIC, balance repaid at year end | Ongoing monthly offset, final repayment after year end |
What Records You’ll Need
- Payment and deduction statements from every contractor, showing gross payment, materials, and the deduction made
- Business expense records — invoices and receipts for tools, equipment, travel, and materials
- Your UTR and, for limited companies, monthly EPS and PAYE records
If you’ve lost a payment and deduction statement, contact the contractor for a duplicate first. If that’s not possible, HMRC holds records of CIS deductions reported against your UTR and can help, though this takes longer.
How Far Back Can You Claim?
You can generally claim overpaid CIS tax for up to 4 years from the end of the relevant tax year, regardless of whether you’re still working in construction now. If you think you may have overpaid in a previous year and never claimed, it’s worth checking rather than assuming it’s too late.
Common Mistakes to Avoid
Filing or Claiming Before the Tax Year Ends
HMRC only processes refunds from 6 April onward — claiming earlier can cause delays or an incorrect amount, since not all deductions for the year will be on record yet.
Limited Companies Trying to Claim via Self Assessment
This route only applies to sole traders and partnerships — companies must use the EPS/PAYE offset mechanism instead.
Poor Record-Keeping
Missing or incomplete payment and deduction statements are one of the most common reasons refund claims are delayed or reduced.
Not Considering Gross Payment Status
If you’re consistently receiving large CIS refunds, it may be more efficient to apply for gross payment status so contractors stop deducting tax at source altogether, rather than repeatedly waiting to reclaim it.
Frequently Asked Questions
When can I claim my CIS refund?
Generally after the tax year ends on 5 April, via Self Assessment (sole traders) or the EPS offset process (limited companies).
Why is my limited company’s process different from a sole trader’s?
A limited company doesn’t file a personal Self Assessment return for its own income — CIS deductions suffered are instead offset against the company’s PAYE and NIC liabilities each month via the EPS.
How long does a CIS refund take?
Sole traders filing early after 5 April often see refunds within a few weeks; claims made during the busy January filing period tend to take longer.
How far back can I claim overpaid CIS tax?
Generally up to 4 years from the end of the relevant tax year.
What if I’ve lost my payment and deduction statements?
Ask the contractor for a duplicate first. If that’s not possible, HMRC holds records of deductions reported against your UTR.
Owed a CIS Refund? Talk to Filing Accounts UK
At Filing Accounts, we help CIS subcontractors and construction companies file accurate returns, claim back overpaid tax quickly, and consider whether gross payment status makes sense for your business.
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