You have probably been overpaying tax every year
If you are a registered CIS subcontractor paid through the Construction Industry Scheme, the odds are strong that HMRC has been holding too much of your money, year after year, and that you can get a good portion of it back. The reason is built into how the scheme works, and it is the single most important thing to understand about CIS refunds.
Under CIS a contractor deducts 20% from the labour element of a registered subcontractor's payments (or 30% if you are not registered) and hands it to HMRC as an advance against your eventual tax and National Insurance bill. The deductions apply to the labour element only: the cost of materials you buy for a job is excluded from the deduction base. So on a £1,000 invoice split as £600 labour and £400 materials, the 20% is taken from the £600, not the full £1,000. That part most people understand.
The part that creates the refund is the timing. That 20% comes off before any of your allowable expenses (tools, van, fuel, insurance, materials, use of home and the rest) are deducted from your income, and before your £12,570 personal allowance is set against your profit. Once those are properly accounted for, your real tax and National Insurance liability is almost always lower than the 20% already collected. The gap is your refund. The typical CIS subcontractor refund is around £2,000 a year (an illustrative market figure, not a guaranteed amount), and it recurs every year you trade under the scheme.
Now multiply that by the years you may not have claimed. HMRC lets you go back and reclaim overpaid tax for the current year plus the four prior tax years. If you have never claimed, or you filed without your expenses, there could be several years of overpayment sitting with HMRC waiting to be reclaimed, but only while the window is still open. This guide explains exactly how the back-years claim works, what a realistic multi-year refund looks like in pounds, and the deadlines that decide how much you can still recover.
The four-year lookback rule, and which years are open now
HMRC's overpayment relief rules let you reclaim overpaid tax for the four tax years before the current one. The crucial feature is that each year closes on its own deadline, set four years after the end of the tax year (5 April), not four years after the filing date. As one new year opens, the oldest one drops off.
As of the 2026/27 tax year, the open years and their claim-by deadlines are as follows.
| Tax year | Year ended | Claim by | Status as of 2026/27 |
|---|---|---|---|
| 2022/23 | 5 April 2023 | 5 April 2027 | Open (oldest, claim first) |
| 2023/24 | 5 April 2024 | 5 April 2028 | Open |
| 2024/25 | 5 April 2025 | 5 April 2029 | Open |
| 2025/26 | 5 April 2026 | 5 April 2030 | Open (most recent) |
Two things follow from this table. First, 2022/23 is the one with a clock on it: once 5 April 2027 passes, that year closes and any overpayment in it is generally lost for good. If you are reading this with several unclaimed years, the oldest open year is the one to deal with first. Second, the deadlines roll forward, so the practical message is the same in any year: deal with your back years before the oldest one expires.
A note on what "the four-year rule" actually limits. It is the time limit for reclaiming an overpayment, and it is the boundary that matters for almost everyone reading this. It sits alongside the ordinary CIS refund process we describe in our guide to claiming a CIS tax refund, which covers a single current year. Back years are the same idea applied to the years you have not yet claimed.
Worked example: four years of a typical sole trader's refunds
Numbers make this concrete. Take a sole-trader subcontractor whose work has grown steadily over four years, from £32,000 of gross CIS income to £45,000. In each year a portion of turnover is materials (excluded from the CIS deduction base) and a separate portion is allowable expenses such as tools, van running costs, insurance and use of home. The CIS deducted is 20% of the labour element. The liability is income tax at 20% on profit above the £12,570 personal allowance, plus Class 4 National Insurance at 6% on profit between £12,570 and £50,270 (and 2% above, which does not bite at these profit levels).
| Tax year | Gross CIS income | Materials | Other expenses | Labour (CIS base) | CIS deducted (20%) | Taxable profit | Tax + Class 4 NI | Estimated refund |
|---|---|---|---|---|---|---|---|---|
| 2022/23 | £32,000 | £4,000 | £3,500 | £28,000 | £5,600 | £24,500 | £3,102 | £2,498 |
| 2023/24 | £37,000 | £5,000 | £4,000 | £32,000 | £6,400 | £28,000 | £4,012 | £2,388 |
| 2024/25 | £41,000 | £5,500 | £4,500 | £35,500 | £7,100 | £31,000 | £4,792 | £2,308 |
| 2025/26 | £45,000 | £6,000 | £5,000 | £39,000 | £7,800 | £34,000 | £5,572 | £2,228 |
| Total | £155,000 | £20,500 | £17,000 | £134,500 | £26,900 | £117,500 | £17,477 | £9,423 |
To see how a single year works, take 2022/23. Gross CIS income is £32,000, of which £4,000 is materials, so the labour element is £28,000 and the CIS deducted is 20% of that, £5,600. After deducting the £4,000 of materials and £3,500 of other expenses, the taxable profit is £24,500. Income tax is 20% of (£24,500 minus the £12,570 personal allowance), which is 20% of £11,930, or £2,386. Class 4 National Insurance is 6% of that same £11,930, which is £716. The total liability is £3,102. HMRC has already collected £5,600, so the refund is £5,600 minus £3,102, which is £2,498.
Across all four open years this subcontractor has overpaid a total of £9,423. That is real money that has been sitting with HMRC, claimable now, but only while each year remains open. The refund per year drifts down slightly as income grows (a larger slice of profit is taxed once the personal allowance is used up), which is exactly why catching the older, lower-income years before they close matters.
The process depends on what you did, or did not, file
How you reclaim a back year depends on what happened with that year's tax return. There are three situations.
You never filed a return for that year
This is common for subcontractors who came into CIS thinking the 20% deducted "covered" their tax and never realised a Self Assessment return was needed to settle up and reclaim the overpayment. The fix is to file a late Self Assessment return now for each open year you missed.
Yes, there is a £100 automatic penalty for filing after the original deadline, and further penalties can build the longer a return stays outstanding. But weigh that against the refund. On the typical year in the table above, the overpayment is well over £2,000. A £100 penalty against a £2,400 refund still leaves you substantially ahead. The genuine constraint is not the penalty, it is the four-year window: you can only reclaim for years that are still open, so an unfiled 2022/23 claim has to be in before 5 April 2027.
You filed but missed expenses or deductions
If you filed a return but left money on the table (forgot to claim your van costs, tools, insurance, materials or use of home, or did not realise certain expenses were allowable), the route is to amend the return. You normally have 12 months from the statutory filing deadline to amend a Self Assessment return. Within that window you simply add the missed allowable expenses, which lowers your taxable profit and raises your refund.
If the 12-month amendment window has already closed for an older year, you are not necessarily out of options. You may be able to claim relief for the overpaid tax through a separate HMRC overpayment-relief process, which carries its own four-year time limit measured from the end of the relevant tax year. That route is more involved and is a good point at which to bring in a specialist, because the claim has to be made in a specific form. The expenses themselves are worth getting right, so our guide to allowable expenses for CIS subcontractors sets out what you can and cannot claim.
You filed correctly and already claimed
If you filed each year and claimed your expenses properly, you may already have had your refunds. In that case the job is just to confirm: check your HMRC online account and your records to see what was refunded for each year. If a year looks light, it is worth reviewing whether all the deductions and expenses were captured, because a missed CIS deduction statement or an overlooked expense category is the usual reason a past refund came in lower than it should have. Understanding how the rates feed the figures helps here, which is covered in our guide to CIS deduction rates explained.
The records you need for each year
A back-years claim is only as good as the records behind it. For each open year you are claiming, gather the following.
- CIS payment and deduction statements. Every contractor who pays you must give you a statement showing the gross payment, the materials, and the CIS deducted. These are the backbone of the claim. Contractors are required to retain CIS records, and to provide these statements, so if you are missing any, ask the contractor: they should be able to reissue them.
- Expense receipts and records. Receipts and invoices for tools, materials you bought, van and fuel costs, insurance, protective clothing, phone, accountancy fees and anything else claimed. Mileage logs if you claim the AMAP mileage rate rather than actual vehicle costs.
- Bank statements. For the relevant years, to corroborate income received and business expenditure.
- P60 or P45 for any employment. If you also had PAYE employment in a year, those figures form part of the same Self Assessment calculation and affect how your allowance and bands are used.
- Your Unique Taxpayer Reference (UTR). The 10-digit reference for your Self Assessment record, needed to file or amend.
If a contractor has gone out of business and you cannot get a duplicate statement, your bank records of payments received, together with any remittance advices, can usually evidence the deductions. The more complete the paper trail, the smoother the claim, and the lower the chance of HMRC raising questions.
The deadlines, year by year
Because the four-year window is the thing that decides whether a refund is recoverable at all, it is worth restating the deadlines on their own. Each open year must be claimed within four years of the end of that tax year, so the deadline is the 5 April four years after the year end, regardless of when (or whether) the original return was filed.
| Tax year | Tax year ended | Original SA filing deadline | Final claim deadline (4-year rule) |
|---|---|---|---|
| 2022/23 | 5 April 2023 | 31 January 2024 | 5 April 2027 |
| 2023/24 | 5 April 2024 | 31 January 2025 | 5 April 2028 |
| 2024/25 | 5 April 2025 | 31 January 2026 | 5 April 2029 |
| 2025/26 | 5 April 2026 | 31 January 2027 | 5 April 2030 |
The pattern is simple once you see it: the final claim deadline is always four years after the end of the tax year, which falls on 5 April. Miss it and the overpayment for that year is generally gone. This is why a multi-year claim should always start with the oldest open year, currently 2022/23, which closes on 5 April 2027, and work forwards.
Worked example: an electrician with three unfiled years
Consider an electrician who registered for CIS, had 20% deducted on every payment, but assumed that was the end of their tax and never filed a Self Assessment return. Three open years are unfiled, with gross CIS income of £38,000, £42,000 and £45,000. In each year, materials and expenses together run at roughly 25% of gross (here, materials around 15% of gross, excluded from the CIS base, and other allowable expenses around 10%). CIS is deducted at 20% of the labour element.
| Year | Gross CIS income | Materials (~15%) | Expenses (~10%) | Labour (CIS base) | CIS deducted (20%) | Taxable profit | Tax + Class 4 NI | Estimated refund |
|---|---|---|---|---|---|---|---|---|
| Year 1 (2023/24) | £38,000 | £5,700 | £3,800 | £32,300 | £6,460 | £28,500 | £4,142 | £2,318 |
| Year 2 (2024/25) | £42,000 | £6,300 | £4,200 | £35,700 | £7,140 | £31,500 | £4,922 | £2,218 |
| Year 3 (2025/26) | £45,000 | £6,750 | £4,500 | £38,250 | £7,650 | £33,750 | £5,507 | £2,143 |
| Total | £125,000 | £18,750 | £12,500 | £106,250 | £21,250 | £93,750 | £14,571 | £6,680 |
Taking Year 1 step by step: gross is £38,000, materials of £5,700 leave £32,300 of labour, and 20% of that is £6,460 of CIS deducted. After £5,700 of materials and £3,800 of other expenses, taxable profit is £28,500. Income tax is 20% of (£28,500 minus £12,570), which is 20% of £15,930, or £3,186. Class 4 NI is 6% of £15,930, or £956. The liability is £4,142, against £6,460 already deducted, so the refund is £2,318.
Across the three unfiled years, this electrician is owed about £6,680. Filing three late returns brings up to three £100 penalties, £300 at most, which against a £6,680 refund is a rounding error. The work is in assembling the deduction statements and expense records for each year, then filing each return correctly.
How long HMRC takes to pay, and the interest it may add
Once a return is filed and processed, HMRC typically pays a Self Assessment refund online within 5 to 10 working days, assuming any identity and bank-detail checks are clear. Two things slow this down. The first is the January deadline rush: in the weeks around 31 January the volume of returns is enormous and refunds take longer. The second is the nature of a back-years claim itself, since older and multi-year claims can attract extra checks before HMRC releases funds. Having your CIS deduction statements and expense records ready to produce keeps any such check short.
On older years there is a sweetener. Where HMRC has held overpaid tax, it may add a repayment supplement, a form of interest, calculated at the Bank of England base rate minus 1% from the relevant date until the refund is paid. You do not claim it separately; HMRC applies it where due when it processes the repayment. On a single recent year it is usually modest, but across several older years it adds a little on top of the refund itself.
If you trade through a limited company, the route is different
Everything above describes the sole-trader route, where overpaid CIS is reclaimed through the Self Assessment return after each year end. A limited company does not work that way. CIS suffered by a company is not put on anyone's personal Self Assessment return. Instead the company offsets the CIS deducted from its income against its own PAYE and CIS liabilities through the Employer Payment Summary (EPS), reclaiming any surplus through that PAYE mechanism rather than through Self Assessment.
Correcting back years for a company therefore means revisiting the payroll and EPS records for those years and putting right what was reported, not filing or amending a personal tax return. The four-year principle still frames how far back you can practically go, but the paperwork, the deadlines within the year and the reporting route are all different. If you operate through a company and think CIS suffered was not fully reclaimed in past years, this is a specific PAYE exercise rather than a Self Assessment one, and it is worth getting reviewed properly because the figures and the process do not map onto the sole-trader version.
What can trigger an HMRC enquiry, and how to avoid one
A correctly evidenced back-years claim is routine. HMRC pays a very large number of CIS refunds every year and a clean claim attracts no special attention. What raises the risk of an enquiry is a claim that looks wrong, in one of a few recognisable ways.
- Understating income. Leaving out CIS income, or a contractor's payments, so the declared turnover does not match what HMRC can see from contractors' own CIS300 returns. The figures are cross-checked, so gaps show.
- Claiming excessive or unsupported expenses. Expenses that are too high for the trade, that are not genuinely for the business, or that cannot be evidenced with receipts. Round-sum or implausible claims stand out.
- Unusual patterns. A profile that is out of step with how subcontractors in that trade typically look, for example expenses that swallow nearly all the income, or sharp unexplained swings between years.
The defence is simple and entirely within your control: declare all your CIS income, claim only allowable expenses you can evidence, and keep your CIS deduction statements for every year. A claim built on complete records and honest figures is exactly what HMRC expects, which is one reason a multi-year claim is worth doing properly with a specialist rather than rushing it. The point of our service is not to inflate a claim, it is to make sure you recover everything you are genuinely owed and that the claim stands up.
Working out your number, and the next step
Back years are the clearest example of why the CIS refund is the front door to getting your tax position straight. Most subcontractors are owed money for every year they have traded, and the four-year rule means some of that money is on a deadline. The two examples above show realistic recoveries of £9,423 across four years and £6,680 across three, on entirely ordinary incomes.
To estimate your own multi-year position, our CIS back years refund calculator lets you enter each open year and see an estimated total. To model a single year in detail, including how expenses and the personal allowance change the result, use the CIS Self Assessment calculator. Both give you a figure to work from before you commit to filing.
When you are ready to actually recover the money, that is where we come in. We reconstruct the deduction statements and expenses for each open year, file or amend each return correctly, and make sure the claim is complete and defensible, then keep you compliant so you stop overpaying in future years. You can start on our CIS refund page. The refund is the way in; the lasting value is never leaving money with HMRC again.