What Is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a tax framework that HMRC introduced to combat tax evasion in the construction sector. Under the rules, contractors — the companies that hire subcontractors — must deduct tax from payments to those subcontractors before the money reaches them. The deducted amounts are passed directly to HMRC as a pre-payment toward the subcontractor's overall tax liability.
The deduction rates are:
- 20% for subcontractors who are registered with HMRC and verified as self-employed for CIS purposes
- 30% for unverified subcontractors who have not yet registered with HMRC under CIS
These deductions apply only to the labour element of your payment — materials are not subject to CIS deductions. If you supply materials as part of your work, ensure your contractor deducts CIS on the labour portion only.
CIS affects everyone in the construction supply chain — from sole trader bricklayers and electricians to limited company directors working on construction sites. Even if you operate through your own limited company, you may still be treated as a subcontractor under CIS rules depending on your contract structure and working arrangements.
Key point: CIS deductions are not an additional tax. They are an advance payment against your eventual tax bill. If too much is deducted, HMRC refunds the difference after you file your Self Assessment return. The problem is that many subcontractors either do not file a return or fail to include all their CIS deductions — leaving money that rightfully belongs to them sitting with HMRC.
How CIS Tax Refunds Work
Claiming a CIS refund involves a straightforward process, but getting it right requires careful record-keeping and accurate reporting. Here is how it works step by step:
Step 1: Check Your CIS Deductions
Every time a contractor pays you, they should provide a CIS deduction statement (form CIS36 or a payslip-style breakdown) showing the gross amount, any materials cost, the labour amount, and the CIS tax deducted. Collect all these statements for the tax year. If any contractor has not provided statements, you can request them or check your HMRC online account where CIS deductions are recorded.
Step 2: Calculate Your Total Tax Liability
Your total tax liability depends on your total taxable income for the year — not just your CIS income. This includes income from other contracts, employment, property, investments, and any other sources. Your personal allowance (£12,570 for 2026/27) is deducted first, and the remaining income is taxed at the applicable rates (basic rate, higher rate, or additional rate). Your CIS deductions count as tax already paid.
Step 3: File Your Self Assessment Return
You report all your CIS deductions in the Construction Industry Scheme section of your Self Assessment return (SA100 form, supplementary pages SA CIS). You must list each contractor, the gross amount paid, the CIS tax deducted, and the tax year. Our accountants complete this section accurately, ensuring every deduction is captured and matched to the correct contractor.
Step 4: HMRC Issues Your Refund
Once HMRC processes your return and calculates your final tax liability, they compare it against the total CIS deductions you have reported. If deductions exceed your liability, they issue a refund. In most cases, refunds arrive within 4–8 weeks of filing. HMRC can pay directly into your bank account or issue a cheque. Our team tracks your refund status and follows up with HMRC if there are any delays.
Important: You can claim CIS refunds for the current tax year and up to 4 previous tax years (provided the filing deadline has not passed). If you have unclaimed CIS deductions from 2022/23 onwards, you may still be eligible for a refund. Contact us and we will check your eligibility across all available years.
How Much CIS Tax Can You Claim Back?
The amount you can reclaim depends on your total income, your personal allowance, the tax band(s) you fall into, and how much CIS tax was deducted. The table below shows typical refund scenarios for a subcontractor earning £500/week gross (£26,000/year) with 20% CIS deductions (£100/week deducted, £5,200/year total deduction):
| Total Annual Income | Personal Allowance | Taxable Income | Basic Rate Tax (20%) | CIS Deducted | Refund Due |
|---|---|---|---|---|---|
| £26,000 (CIS only) | £12,570 | £13,430 | £2,686 | £5,200 | £2,514 |
| £35,000 (CIS + other income) | £12,570 | £22,430 | £4,486 | £5,200 | £714 |
| £50,000 (CIS + other income) | £12,570 | £37,430 | £7,486 | £5,200 | £0 |
| £26,000 (CIS, 30% unverified rate) | £12,570 | £13,430 | £2,686 | £7,800 | £5,114 |
As the table shows, subcontractors whose only income is from CIS work and who earn below the higher-rate threshold can expect significant refunds. The more your tax liability falls short of the CIS deductions, the larger your refund. Higher-rate taxpayers may see little or no refund because their tax rate matches or exceeds the CIS deduction rate.
Note: These figures are illustrative and assume no other deductions (such as the marriage allowance, blind person's allowance, or pension contributions). Your actual refund will depend on your full financial picture. Our accountants model your specific situation to give you an accurate estimate before you commit.
CIS + IR35: Common for Contractors
Many contractors working in construction face both CIS and IR35 considerations — sometimes on different contracts, sometimes on the same project. It is increasingly common for contractors to hold a mix of contracts: some inside IR35 through an umbrella company, some outside IR35 through their limited company, and some where CIS deductions apply directly.
When you have both CIS and IR35 income in the same tax year, your Self Assessment return must handle both correctly. Key points to consider:
- Separate income streams, one return: All your income — whether CIS-based, inside IR35 via an umbrella, or outside IR35 via your limited company — is reported on the same Self Assessment return. Your CIS deductions are offset against your total tax liability, which includes tax on your IR35-related income.
- Overlap risk: If some of your CIS income relates to work that HMRC later deems to be inside IR35, the interaction between CIS deductions and deemed employment payments can be complex. Our accountants understand these edge cases and ensure you are not double-taxed.
- Our calculators handle both: Use our Inside IR35 Calculator and Outside IR35 Calculator to model your take-home pay under different scenarios. If you also have CIS income, add it as a separate line in your tax planning to get the full picture.
Read our IR35 Guide for a complete explanation of how IR35 affects contractor taxation, and see our Best Contractor Accountants page for firms that specialise in CIS and IR35 combined scenarios.
Our CIS Service Includes
We provide a comprehensive CIS tax return service designed to maximise your refund while minimising the time and hassle involved. Every case is handled by a CIS specialist accountant who understands the scheme inside out.
CIS Deduction Reconciliation
We gather your CIS deduction statements from every contractor you worked with during the year, cross-reference them against HMRC records, and identify any deductions that have been missed or under-reported. This is the most common area where subcontractors leave money on the table — contractors sometimes provide incorrect statements or omit deductions altogether.
Self Assessment Filing
We complete and submit your full Self Assessment tax return (SA100, SA CIS supplementary pages, and all other relevant sections) to HMRC. Your return is checked for accuracy and completeness before submission, and we handle any queries HMRC raises during processing. The flat fee covers the entire filing, not just the CIS elements.
HMRC Correspondence
If HMRC queries your return or requests additional evidence (such as CIS deduction statements or proof of materials costs), we handle all correspondence on your behalf. We know what HMRC looks for in CIS refund claims and can respond quickly and accurately to prevent delays.
Refund Tracking
Once your return is filed, we monitor the processing timeline and follow up with HMRC if your refund is delayed beyond the typical 4–8 week window. We also check that the refund amount matches our calculations and flag any discrepancies immediately.
IR35 Integration
If you have both CIS and IR35-related income, we ensure your return handles the interaction correctly. Our accountants are experienced in mixed-income scenarios and will ensure you are not overpaying tax on either stream. We also advise on whether restructuring your contracts could reduce your overall tax burden.
Ongoing Support
Your CIS specialist is available throughout the year for questions about new contracts, CIS deduction rates, allowable expenses, and tax planning. We also remind you when it is time to start gathering your CIS statements for the next filing season, so nothing falls through the cracks.
How We Compare to Other CIS Accountants
Not all accountants handle CIS returns equally. High-street accountants may file a basic Self Assessment but miss CIS-specific optimisation opportunities. General tax accountants may not have the specialist knowledge to challenge HMRC on disputed CIS deductions. Here is how our service stacks up:
| Feature | High Street Accountant | General CIS Specialist | RateCoach CIS Service |
|---|---|---|---|
| CIS-specific knowledge | Limited | Good | Advanced |
| Deduction reconciliation | Basic check | Standard | Full cross-reference with HMRC |
| IR35 + CIS mixed income | Rarely handled | Sometimes | Specialist expertise |
| Refund tracking | Not included | Sometimes | Active follow-up |
| Previous years claims | Extra charge | Often extra | Included in scope |
| Pricing | £200–£400+ | £150–£250 | From £150 flat fee |
| No refund, no fee | No | Rarely | Yes |
Put simply: we focus exclusively on contractor and subcontractor tax matters. Our CIS service is built around the specific needs of construction workers, not bolted onto a general accounting practice. This means deeper knowledge, more efficient filing, and higher refund outcomes for our clients.
Ready to Claim Your CIS Refund?
Find out how much you could reclaim — with a dedicated CIS specialist handling your Self Assessment from start to finish. Flat fee from £150. No refund, no fee.
Get Your CIS Refund Estimate →Best CIS Accountants
Looking for an accountant who specialises in CIS returns and contractor tax? Many of the firms we review on our Best Contractor Accountants page also handle CIS returns for subcontractors. Firms with strong CIS expertise include:
- Nixon Williams — CIS returns included in standard package, full deduction reconciliation
- SG Accounting — competitive flat-fee pricing for CIS Self Assessment filings
- InTouch — dedicated account managers familiar with CIS and IR35 interaction
- Aardvark Accounting — online-focused service with CIS-specific support
Our guide to best contractor accountants compares these firms side by side on fee ranges, included services, IR35 support, and customer reviews. If you need an accountant who understands both CIS and limited company contracting, that page is a good starting point.
Frequently Asked Questions
Sources
- What is the Construction Industry Scheme? — GOV.UK
- Understanding the Construction Industry Scheme (CIS) — GOV.UK
- CIS: tax deductions for contractors and subcontractors — GOV.UK
- Off-payroll working (IR35) guidance — GOV.UK
- Self Assessment tax returns — GOV.UK