How Do I Claim a CIS Tax Refund in 2026/27?

If you are a sole trader subcontractor, you claim your CIS tax refund through your Self Assessment tax return once the tax year ends on 5 April. If you work through a limited company, you offset CIS deductions against your PAYE bill during the year and claim any balance from HMRC online after the year closes. Most refunds arise because the flat 20% deduction ignores your personal allowance and business expenses, so many subcontractors overpay tax all year without realising it.

Why do CIS subcontractors overpay tax?

Under the Construction Industry Scheme, contractors deduct tax at source before paying you: 20% if you are registered with HMRC for CIS, 30% if you are not, and 0% if you hold gross payment status. The deduction is taken from the labour element of your invoice, after materials and VAT are stripped out.

The problem is that the deduction is a flat rate. It takes no account of your tax-free personal allowance (£12,570 in 2026/27), your allowable business expenses such as tools, insurance, protective clothing and travel between sites, or the fact that Class 4 National Insurance is only charged at 6% between £12,570 and £50,270. For a typical registered subcontractor, 20% deducted on gross labour income is more than the tax and National Insurance actually due on the final profit — and the difference is your refund.

How sole traders claim a CIS refund

When you can claim

You claim through your Self Assessment tax return. For the 2026/27 tax year (6 April 2026 to 5 April 2027) you can file any time from 6 April 2027 — there is no need to wait for the 31 January 2028 online filing deadline. The earlier you file, the earlier HMRC repays you, which is why most CIS subcontractors file in April or May.

What to include

On the self-employment pages of your return you declare your turnover and expenses as normal, then enter the total CIS deductions your contractors have taken in the box for “CIS deductions taken from your payments”. HMRC calculates the income tax and Class 4 National Insurance due on your profit, sets the CIS already deducted against it, and repays the difference, normally straight to your bank account. Keep every monthly payment and deduction statement your contractors give you — they are your evidence of what was withheld. Our personal tax advisors in London prepare and file CIS refund returns for subcontractors across the trades.

How limited companies claim back CIS deductions

Company subcontractors follow a different route. During the year, you record CIS deductions suffered on your monthly Employer Payment Summary (EPS) and set them against the PAYE and National Insurance your company owes for its staff. If, by 5 April, your deductions exceed what you have been able to offset, you claim the balance from HMRC after the tax year ends — online, using the Government Gateway account linked to your PAYE and Corporation Tax records. You will need your PAYE reference and Corporation Tax UTR, and HMRC usually responds within 8 weeks. The repayment can be refunded to your bank or set against your Corporation Tax or VAT bills. The full process is set out in HMRC’s guidance on claiming a refund of CIS deductions as a limited company. If your company accounts and returns are behind, the claim will stall — our accounts and corporation tax service keeps everything filed so the refund is not held up.

Worked example: a registered subcontractor in 2026/27

Dan is a self-employed electrician registered for CIS. In 2026/27 he invoices £40,000 of labour, and his contractors deduct 20% at source.

• CIS deducted during the year: £40,000 × 20% = £8,000
• Allowable expenses (van costs, tools, insurance, phone): £8,000, leaving a taxable profit of £32,000
• Income tax: £32,000 − £12,570 personal allowance = £19,430 × 20% = £3,886.00
• Class 4 National Insurance: £19,430 × 6% = £1,165.80
• Total due for the year: £5,051.80

Dan has already paid £8,000 through CIS, so when he files his return in April 2027 HMRC repays him £2,948.20. You can estimate your own position in minutes with our free CIS tax refund calculator.

How to make sure you receive the full amount

Three things make the biggest difference. First, register for CIS if you have not already — unregistered subcontractors suffer 30% deductions instead of 20%, tying up even more of your cash until refund time. Second, claim every allowable expense: tools, materials you bought yourself, protective clothing, public liability insurance, van and fuel costs for travel between sites, phone and accountancy fees all reduce your taxable profit and increase the refund. Third, keep your paperwork: if your figures do not match what your contractors reported, HMRC will query the claim, so chase any missing payment and deduction statements before you file. Established businesses with a clean compliance record can also apply for gross payment status, which stops deductions at source altogether.

CIS refund FAQs

How long does a CIS refund take?

For sole traders, HMRC normally repays within a few weeks of the Self Assessment return being processed — filing in April usually means a refund by early summer. For limited company claims, HMRC aims to respond within 8 weeks, and incomplete claims or mismatched figures take longer.

Can I claim CIS refunds for earlier tax years?

Yes. Sole traders can generally go back up to four years, either by amending a return or making an overpayment relief claim. Limited companies can claim online or by post for the past six tax years, with older years claimed by post.

Will I always get a refund as a CIS subcontractor?

No. If your profits are high enough that your income tax and National Insurance exceed the 20% deducted — for example, once significant income falls into the 40% band above £50,270 — you may owe a balance instead. A refund is common, but it is never guaranteed, which is why the calculation should be done properly each year.

Written by the Accountactical Team — ACCA-Approved Accountants, London.

This article is general information for UK small businesses and subcontractors, not formal tax advice — speak to an accountant about your own circumstances before acting on it.