Most CIS subcontractors overpay tax during the year, and reclaiming overpaid CIS is one of the most common reasons they file a Self Assessment return. The 20% (or 30%) deduction that contractors take from your payments is a flat rate applied to your labour income — it doesn't account for your expenses, your personal allowance, or your actual tax bracket. When you file, HMRC compares what was deducted against what you actually owe, and refunds the difference.

This guide explains why overpayment happens, how to work out if you're owed a CIS tax refund, and what to expect when your refund is processed.

Why CIS Subcontractors Overpay Tax

CIS deductions are advance payments of tax, not your final tax bill. They're calculated as a flat percentage of your labour income with no adjustments for your personal circumstances. This very often results in overpayment because:

1. Your Personal Allowance Isn't Applied

Everyone in the UK gets a tax-free personal allowance of £12,570 (2025/26). CIS deductions ignore this — your contractor deducts 20% from the first pound of labour. But when HMRC calculates your actual tax, the first £12,570 of profit is tax-free.

Impact: On £12,570 of income, CIS deductions take £2,514 (at 20%) that you don't actually owe.

2. Your Expenses Reduce Your Taxable Profit

CIS is deducted on your gross labour income. But you're taxed on your profit — income minus allowable expenses. Every pound of legitimate expenses reduces your taxable profit, widening the gap between what was deducted and what you owe.

Common expenses that reduce your profit include:

Tools and equipment
Vehicle and travel costs
Work clothing and PPE
Phone and insurance
Accountancy fees

3. Materials Weren't Deducted Correctly

If you supplied materials on a job but your contractor applied CIS to the full invoice amount (including materials), you've been over-deducted. Materials should be excluded from the CIS calculation — any deduction on the materials portion is an overpayment.

4. You Were Deducted at 30% Instead of 20%

If you weren't registered for CIS, or your contractor couldn't verify you (perhaps your UTR wasn't available), the 30% unregistered rate was applied. That's 10% more than necessary on every payment. Our guide on CIS deduction rates explains the three rates and how to get the lower one.

5. Your Income Falls Below the Tax Threshold

If your total taxable profit for the year is below £12,570 (2025/26), your entire tax liability is zero — but CIS deductions were still taken. Every penny deducted is an overpayment.

How to Check If You've Overpaid CIS Tax

You can estimate your overpayment before filing by doing a rough calculation:

Step 1: Add Up Your CIS Deductions

Check your CIS payment statements from every contractor you worked for during the tax year. Add up all the CIS deductions shown.

Step 2: Calculate Your Taxable Profit

Take your total income and subtract your allowable expenses:

Total CIS income − allowable expenses = taxable profit

Step 3: Work Out Your Tax and NI Bill

Tax component	Rate (2025/26)	Applies to
Personal allowance	£0 (tax-free)	First £12,570 of profit
Income Tax (basic rate)	20%	Profit between £12,571 and £50,270
Class 4 NI	6%	Profit between £12,571 and £50,270
Class 4 NI (upper)	2%	Profit above £50,270

Step 4: Compare

If your total CIS deductions exceed your tax and NI bill, the difference is your refund.

Worked Example: Typical CIS Refund

Sarah is a registered plasterer. Here are her figures for the 2025/26 tax year:

Item	Amount
Total CIS income	£42,000
CIS deducted (20%)	£8,400
Allowable expenses	£5,500
Taxable profit	£36,500

Her actual tax bill:

Component	Calculation	Amount
Income Tax	20% × (£36,500 − £12,570) = 20% × £23,930	£4,786
Class 4 NI	6% × (£36,500 − £12,570) = 6% × £23,930	£1,436
Total tax and NI		£6,222

Refund calculation:

CIS deducted: £8,400 Tax and NI owed: £6,222 Refund due: £2,178

Sarah overpaid by £2,178 because her 20% flat-rate deductions didn't account for her personal allowance or her £5,500 in expenses.

Worked Example: CIS Refund for Unregistered Subcontractor

James worked as a labourer and wasn't registered for CIS, so contractors deducted at 30%.

Item	Amount
Total CIS income	£30,000
CIS deducted (30%)	£9,000
Allowable expenses	£3,000
Taxable profit	£27,000

His actual tax bill:

Component	Calculation	Amount
Income Tax	20% × (£27,000 − £12,570) = 20% × £14,430	£2,886
Class 4 NI	6% × £14,430	£866
Total tax and NI		£3,752

Refund calculation:

CIS deducted: £9,000 Tax and NI owed: £3,752 Refund due: £5,248

James's refund is much larger because the 30% rate over-deducted significantly. Registering for CIS would have reduced his deductions and improved his cash flow throughout the year.

How to Get Your CIS Refund

The only way to reclaim overpaid CIS as a sole trader is through Self Assessment. Our guide on how to claim back CIS deductions covers the filing process in detail. The key steps are:

File your Self Assessment return for the relevant tax year
Enter your total income and expenses
Enter your CIS deductions in the CIS section of the return
HMRC calculates your actual liability and compares it to deductions
Refund is issued if you've overpaid

How Long Does a CIS Refund Take?

HMRC typically processes refunds within 2 to 3 weeks of receiving your Self Assessment return, provided the return is complete and there are no queries. The refund is paid directly to the bank account you specify on your return.

If your return is selected for a compliance check, the refund may be delayed until the check is resolved.

When Can You File?

You can file your 2025/26 Self Assessment return from 6 April 2026 onwards. The filing deadline is 31 January 2027. Filing early means you get your refund sooner — there's no advantage to waiting until the deadline.

What Reduces Your CIS Refund

Not every subcontractor gets a large refund. Your refund will be smaller (or you may owe money) if:

You have high income and low expenses — if your income is well above the personal allowance and you have few deductible expenses, the 20% CIS rate may closely match your actual tax rate
You have other income — employment income, rental income, or savings interest that pushes you into a higher tax band
You have a student loan — repayments are calculated alongside your tax bill and reduce your net refund
You owe payments on account — HMRC may use your refund to offset advance payments for the next tax year

CIS Refund FAQs

How much CIS refund can I expect?

It varies based on your income, expenses, and deduction rate. As a rough guide, subcontractors earning £30,000–£50,000 with typical expenses of £3,000–£8,000 commonly receive refunds between £1,500 and £4,000. Unregistered subcontractors (30% rate) typically receive larger refunds.

Can I claim a CIS refund without an accountant?

Yes. You can file your Self Assessment return yourself through HMRC's online service. The CIS section of the return has specific fields for your deductions. However, an accountant can help identify expenses you may have missed, which could increase your refund.

What if I didn't keep my CIS payment statements?

Contact your contractor and ask for replacement statements. If the contractor has ceased trading, contact HMRC's PT Operations team — they hold records of CIS deductions submitted by contractors and can confirm the amounts deducted from your payments.

Do I still get a refund if I owe other taxes?

HMRC offsets your CIS refund against any other tax debts first. If you owe income tax from another source or have unpaid Self Assessment balances, HMRC will reduce your refund accordingly. You receive the net amount after any debts are cleared.

This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.

Official Sources

Check your CIS payments and deductions - GOV.UK
Self Assessment tax returns - GOV.UK
Construction Industry Scheme (CIS) - GOV.UK
Claim a CIS refund for limited companies - GOV.UK

Reclaiming Overpaid CIS: Why You Might Be Owed a Refund

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