Most CIS subcontractors are owed money by HMRC at the end of the tax year. The scheme deducts a flat 20% from registered subcontractors — 30% from unregistered ones — with no allowance for the personal allowance, business expenses or the actual rate of tax due. When Self Assessment compares what you have already paid with what you actually owe, the difference usually comes back to you as a refund.
CIS takes 20% of the labour element of every payment, from the first pound. Your real tax bill does not work that way: the first £12,570 of profit is covered by the personal allowance, your expenses come off before tax is calculated, and only the remainder is taxed at 20%.
The result is a gap. Deduct 20% of everything all year and you have usually handed HMRC more than your income tax and Class 4 National Insurance combined.
Take a registered subcontractor billing £30,000 of labour in a tax year. The contractor deducts £6,000 and pays it straight to HMRC.
Now run the real numbers. Subtract £4,000 of expenses — travel, tools, phone, protective clothing — and taxable profit is £26,000. After the personal allowance, income tax comes to roughly £2,700 and Class 4 National Insurance adds about £800: around £3,500 in total, against £6,000 already deducted. The refund is about £2,500. The lower your profit and the bigger your expenses, the wider that gap grows.
CIS deductions do not remove the need to file — they sit on your HMRC account like tax already paid. Register for Self Assessment, report your income and expenses, and enter your total CIS deductions for the year. HMRC offsets them against your income tax and Class 4 National Insurance, and repays the difference once the return is processed.
Honest small print: the refund is not automatic. HMRC only repays once you file a return, and only against figures that match the CIS deductions on record — which is what your monthly statements are for.
Online filers usually see the repayment within a few weeks of HMRC processing the return, paid to your nominated bank account. Expect it to take longer around the 31 January peak, and budget for extra delay if HMRC runs security checks before releasing money.
Keep your monthly CIS statements and your own payment records — they are the evidence behind the deduction figure you are claiming back.
See also: how CIS deductions work, the monthly statements that prove what you paid and how CIS fits with Making Tax Digital.
Watch your refund build through the year — every payment, expense and deduction logged.
CIS Subcontractor Tax Tracker — £9