What is the EPS and how does a limited company use it to reclaim CIS?

The Employer Payment Summary is a monthly submission within the PAYE Real Time Information system. A limited company that has had CIS deducted from payments it received reports those deductions on the EPS, and HMRC reduces the PAYE and NIC the company would otherwise remit that month by the same amount. The company nets off the CIS credit against its payroll bill in the same 30-day cycle, rather than filing a separate claim or waiting for the year end.

When must the EPS be filed to use the CIS offset?

The EPS must reach HMRC by midnight on the 19th of the month following the end of the tax month in which the CIS deductions were suffered. Tax months run to the 5th, so deductions suffered in the month ending 5 July must be reported on an EPS filed by 19 July. The reduced PAYE payment is then due by the 22nd of the same month (electronic). If the EPS is late, HMRC expects the full PAYE amount and the company must file a correcting EPS and contact the employer helpline to recover the position.

What figure goes in the CIS suffered field on the EPS?

The total CIS deductions actually withheld in that tax month, taken directly from the CIS deduction statements the contractor provided. This is the tax amount withheld, not the gross invoice value and not the labour-only portion of the invoice. Entering the gross income figure is one of the most common EPS errors and will produce a mismatch with the contractor CIS300 monthly return, triggering an HMRC query.

What happens when CIS deducted is more than the PAYE due that month?

The surplus carries forward to the following month automatically. The EPS for each subsequent month includes both fresh deductions and any brought-forward credit. Any credit that remains unabsorbed at 5 April becomes the year-end excess. It is either offset against the Corporation Tax liability for the same accounting period or refunded by HMRC as a cash payment, with a target of 25 working days for processing once the final EPS and CT600 are submitted.

How are CIS deductions treated for Corporation Tax?

CIS deductions suffered by a limited company are treated as advance payments of Corporation Tax, not as income tax. HMRC holds the credit on the company CT account. During the year the EPS mechanism allows the company to draw on that credit early, setting it against PAYE and NIC bills. At year end, any remaining credit is applied to the CT liability. If the CT liability is smaller than the credit, HMRC refunds the balance. Corporation Tax rates for 2026/27 are 19% on profits up to 50,000 and 25% on profits over 250,000, with marginal relief between those thresholds.

How does the limited-company EPS route compare to the sole-trader Self Assessment route?

A sole trader can only recover over-deducted CIS through the Self Assessment return for the tax year, which is not due until 31 January after the tax year ends. A deduction suffered in April 2026 sits inside the 2026/27 tax year, which does not end until 5 April 2027, and the return is not due until 31 January 2028. A sole trader who files at the deadline waits around 22 months to recover that April 2026 deduction. A limited company offsets each month deductions against that month PAYE bill, so the effective recovery cycle is 30 days. For a company with substantial CIS deductions, that difference is real working capital rather than a timing technicality.

Does a limited company need to file an EPS in months when it has no PAYE liability?

Yes. If CIS deductions were suffered in a month where the company has no PAYE or NIC due, the EPS is still required to record the credit. Skipping the EPS in a nil-PAYE month loses that month credit until a correcting submission is made. The credit does not disappear but it is not applied until it is formally reported.

What records does a limited company need to support the EPS CIS offset?

A CIS deduction statement from each contractor who made a deduction in the relevant period. The statement must show the contractor name and UTR, the company UTR, the gross amount paid, the materials element, the CIS deduction amount, and the period of payment. These must be retained for at least three years from the end of the relevant tax year. HMRC requests them during compliance checks and the EPS offset becomes unsupported without them.

What is the EPS and how does a limited company use it to reclaim CIS?

The Employer Payment Summary is a monthly submission within the PAYE Real Time Information system. A limited company that has had CIS deducted from payments it received reports those deductions on the EPS, and HMRC reduces the PAYE and NIC the company would otherwise remit that month by the same amount. The company nets off the CIS credit against its payroll bill in the same 30-day cycle, rather than filing a separate claim or waiting for the year end.

When must the EPS be filed to use the CIS offset?

The EPS must reach HMRC by midnight on the 19th of the month following the end of the tax month in which the CIS deductions were suffered. Tax months run to the 5th, so deductions suffered in the month ending 5 July must be reported on an EPS filed by 19 July. The reduced PAYE payment is then due by the 22nd of the same month (electronic). If the EPS is late, HMRC expects the full PAYE amount and the company must file a correcting EPS and contact the employer helpline to recover the position.

What figure goes in the CIS suffered field on the EPS?

The total CIS deductions actually withheld in that tax month, taken directly from the CIS deduction statements the contractor provided. This is the tax amount withheld, not the gross invoice value and not the labour-only portion of the invoice. Entering the gross income figure is one of the most common EPS errors and will produce a mismatch with the contractor's CIS300 monthly return, triggering an HMRC query.

What happens when CIS deducted is more than the PAYE due that month?

The surplus carries forward to the following month automatically. The EPS for each subsequent month includes both fresh deductions and any brought-forward credit. Any credit that remains unabsorbed at 5 April becomes the year-end excess. It is either offset against the Corporation Tax liability for the same accounting period or refunded by HMRC as a cash payment, with a target of 25 working days for processing once the final EPS and CT600 are submitted.

How are CIS deductions treated for Corporation Tax?

CIS deductions suffered by a limited company are treated as advance payments of Corporation Tax, not as income tax. HMRC holds the credit on the company's CT account. During the year the EPS mechanism allows the company to draw on that credit early, setting it against PAYE and NIC bills. At year end, any remaining credit is applied to the CT liability. If the CT liability is smaller than the credit, HMRC refunds the balance. Corporation Tax rates for 2026/27 are 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between those thresholds.

How does the limited-company EPS route compare to the sole-trader Self Assessment route?

A sole trader can only recover over-deducted CIS through the Self Assessment return for the tax year, which is not due until 31 January after the tax year ends. A deduction suffered in April 2026 sits inside the 2026/27 tax year, which does not end until 5 April 2027, and the return is not due until 31 January 2028. A sole trader who files at the deadline waits around 22 months to recover that April 2026 deduction. A limited company offsets each month's deductions against that month's PAYE bill, so the effective recovery cycle is 30 days. For a company with substantial CIS deductions, that difference is real working capital rather than a timing technicality.

Does a limited company need to file an EPS in months when it has no PAYE liability?

Yes. If CIS deductions were suffered in a month where the company has no PAYE or NIC due, the EPS is still required to record the credit. Skipping the EPS in a nil-PAYE month loses that month's credit until a correcting submission is made. The credit does not disappear but it is not applied until it is formally reported.

What records does a limited company need to support the EPS CIS offset?

A CIS deduction statement from each contractor who made a deduction in the relevant period. The statement must show the contractor's name and UTR, the company's UTR, the gross amount paid, the materials element, the CIS deduction amount, and the period of payment. These must be retained for at least three years from the end of the relevant tax year. HMRC requests them during compliance checks and the EPS offset becomes unsupported without them.

CIS Limited Company EPS Reclaim: How It Works 2026/27

Trade Tax Specialists Editorial Team

Figures checked against primary sources (HMRC, legislation.gov.uk, HMRC CIS guidance) in 12 June 2026.

Key takeaways

A limited company offsets CIS deductions suffered against its monthly PAYE and NIC liabilities via the Employer Payment Summary (EPS), rather than waiting until the tax year end.
When CIS deducted exceeds the PAYE due in a month, the surplus carries forward automatically. Any credit still unabsorbed at 5 April can be set against Corporation Tax or refunded by HMRC, with a 25-working-day target for EPS repayments.
CIS deductions are treated as advance payments of Corporation Tax for a limited company. They reduce the CT due, rather than creating a separate income tax refund stream as they do for a sole trader.
The most common EPS errors (reporting in the wrong field, missing the 19th deadline, or not filing in months with no PAYE) all result in HMRC expecting the full PAYE amount, losing the in-month benefit and requiring a correcting submission.

Why timing is the central point for limited companies

Every CIS deduction is an advance payment towards the subcontractor's eventual tax bill. For a sole trader, the route back is through Self Assessment after the tax year. The 2026/27 tax year does not end until 5 April 2027, and the return for it is not due until 31 January 2028, so a deduction suffered in April 2026 cannot be reclaimed until the year-end return is filed. A sole trader who waits until the filing deadline recovers that April 2026 deduction around 22 months after it was taken. Even an early filer is waiting roughly a year on the earliest deductions in the year.

A limited company has a different option. Because it runs a PAYE scheme, it sends HMRC a payroll remittance every month. The CIS rules allow the company to reduce that remittance by the amount of CIS it has suffered in the same tax month, using the Employer Payment Summary (EPS). Recovery happens in a 30-day cycle rather than at the year end.

This post covers the practical steps, a worked month-by-month example, what happens when CIS deducted exceeds PAYE due, and how the two routes compare. The full EPS filing mechanics, deadline detail and year-end excess credit treatment are covered in our guide to how CIS limited companies reclaim deductions in real time.

The labour-only rule: what goes on the EPS

CIS deductions apply to the labour element only. Materials are excluded. On a £10,000 invoice with £8,000 labour and £2,000 materials, the 20% deduction applies to the £8,000 only, giving £1,600, not £2,000. The EPS CIS suffered field takes the amount actually deducted, read from the CIS deduction statement. Entering the gross invoice value produces an overstated offset and a mismatch with the contractor's CIS300 return.

Month-by-month worked example

A single-director limited company registered as a CIS subcontractor, carrying out groundworks. Gross CIS income is £8,000 a month (labour only), deducted at 20%, so £1,600 withheld each month. The company has one part-time employee.

Month	CIS deducted from company (£)	PAYE/NIC due before offset (£)	Net payable to HMRC after EPS offset (£)	Surplus CIS credit carried forward (£)	Running cash-flow benefit vs sole-trader route (£)
July 2026	1,600	2,000	400	0	1,600
August 2026	1,600	2,000	400	0	3,200
September 2026	1,600	1,200	0	400	4,800

In July and August the PAYE/NIC bill exceeds the £1,600 CIS credit, so the company pays the £400 difference and retains the £1,600 that would otherwise sit with HMRC. In September the PAYE bill drops to £1,200 (the employee is on reduced hours), so the £1,600 credit covers it in full and £400 carries forward.

By the end of September the company has recovered £4,800 across three months via the EPS offset. Under the sole-trader route all £4,800 would still be with HMRC. The PAYE figures include director income tax, employee Class 1 NIC and employer NIC (charged at 15% on earnings above £5,000 from April 2025). The example is illustrative; the actual figures depend on the company's payroll structure.

When CIS deducted exceeds PAYE due: the carry-forward and the year-end refund

September in the example above produced a £400 surplus. In practice, a company with lower payroll, or one that has grown its CIS income relative to its PAYE obligations, may accumulate a larger carry-forward over the year. The EPS accumulates the credit month by month and it does not expire during the tax year.

At 5 April, any credit that has not been absorbed against PAYE and NIC during the year becomes the year-end excess. There are two outcomes, and they are not mutually exclusive.

Offsetting the excess against Corporation Tax

CIS deductions are advance payments of Corporation Tax, not income tax. The excess credit sits on the company's CT account and reduces the CT liability for the same accounting period. Corporation Tax rates for 2026/27 are 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between. The CIS credit reduces the cash CT payment pound for pound. It does not alter the company's taxable profits: the CT computation runs on trading income, allowable expenses and capital allowances as normal, and the credit is applied to the resulting bill.

Receiving a cash refund from HMRC

Where the excess CIS credit exceeds the CT liability, HMRC refunds the balance in cash. The company requests this via the final EPS and the CT600 process. HMRC targets processing within 25 working days once the claim is submitted. Discrepancies between EPS figures and what contractors reported on their CIS300 returns are the single biggest cause of delays, so reconciling deduction statements with contractor records before filing is worth the time.

Practical steps: making the EPS work correctly

Collect CIS deduction statements promptly

Each contractor who deducts CIS must provide a written statement at the time of payment showing the gross amount, the materials element, the CIS deduction and the tax period. Without the statement there is no documented basis for the EPS offset. Request it in writing if a contractor is slow and follow up before the 19th filing deadline.

Total the deductions by tax month

Tax months run from the 6th to the 5th. All contractor deductions falling within the same tax month are added together. Attribution uses payment date, not invoice date: a payment on 3 August sits in the month ending 5 August; a payment on 8 August sits in the following month.

Enter the figure in the CIS suffered field

Most cloud payroll packages include an EPS CIS deductions suffered field. It must be populated manually each month. The software does not pull the figure from your invoicing system. Leaving it blank means the EPS reports no offset and the full PAYE falls due.

File the EPS by the 19th and pay the balance by the 22nd

The EPS must reach HMRC by midnight on the 19th of the following month. Electronic payment of the remaining balance is due by the 22nd. A late EPS triggers a full PAYE demand. Recovery needs a correcting EPS and a call to the employer helpline, adding time and a potential late-payment notice. Treat the 19th as a hard deadline.

Retain deduction statements for three years

HMRC can request the underlying CIS statements for any period in the last three years during a compliance check. Without them, the EPS offset becomes unsupported and HMRC can charge for underpaid PAYE. File statements by contractor and tax month as they arrive.

EPS route versus sole-trader Self Assessment: a direct comparison

The difference in timing between the two routes is not an administrative detail. For a business with meaningful CIS deductions it is a working-capital question that affects the ability to fund payroll, materials and the forward pipeline.

	Sole trader (Self Assessment)	Limited company (EPS)
Recovery mechanism	Self Assessment return, filed by 31 January after the tax year	EPS offset against PAYE, filed monthly by 19th
When money comes back	February following the tax year at the earliest	Each monthly PAYE cycle, starting the month after the deduction
Typical wait from first deduction	Up to around 22 months on the earliest deductions if filed at the deadline	Approximately 30 days per month's deduction
How excess is treated	Refund via Self Assessment; HMRC online repayment typically 5 to 10 working days after SA processed	Offset against CT liability, or cash refund within 25 working days of final EPS and CT600
Cash locked with HMRC at any point during the year	Accumulates month by month; full year's deductions potentially locked until February	Largely absorbed each month; only unabsorbed surplus carried at year end
Administrative requirement	One Self Assessment return per year	Monthly EPS submission; deduction statements each pay period

On the figures in the worked example (£8,000 a month gross CIS labour, 20% rate), a sole trader accumulates £19,200 locked at HMRC over a full year before the January Self Assessment deadline releases any of it. The same limited company, using the EPS correctly, recovers most of that credit each month against its PAYE bill.

The limited-company structure brings additional costs: CT filing, dividend extraction (2026/27 rates: 10.75% basic, 35.75% higher, 39.35% additional), employer NIC at 15% above £5,000, and accountancy fees typically £150 to £250 a month for a company with full CIS compliance. The structure decision should weigh all of those, not just the EPS timing benefit. Our guide to CIS sole trader versus limited company works through the full comparison.

The alternative: Gross Payment Status

Both routes above involve recovering money that was deducted in the first place. A company with Gross Payment Status (GPS) is paid at 0%, so there is nothing to reclaim. GPS requires passing a turnover test (£30,000 per director or £100,000 total net CIS turnover for a limited company), a business test and a 12-month compliance test.

From 6 April 2026, Finance Act 2026 (c.11, s.220) allows HMRC to revoke GPS immediately where a contractor knew or should have known about fraud in the supply chain. Under the inserted provisions (ss.62A and 62B of Finance Act 2004), a company faces a charge of 20% of the relevant payment, with a further penalty under s.72A of up to 30% of that s.62A or s.62B amount. Where the company does not pay the s.72A penalty, s.72B allows HMRC to issue a decision notice to a company officer requiring that officer personally to pay a specified portion of it, up to 100% of the company's s.72A penalty. The reapplication ban differs by case type: one year following a s.62A determination and five years following a s.62B determination. For a company on £500,000 turnover, losing GPS costs roughly £100,000 a year. The full qualification tests and anti-fraud requirements are covered in our guide to CIS Gross Payment Status.

Estimating the benefit for your company

To sense-check the monthly offset, take the labour element of your typical CIS invoices and apply the rate (0% GPS, 20% registered, 30% unregistered), then compare the result to your monthly PAYE and NIC bill. Our CIS deduction calculator works out the deduction on any invoice, splitting labour and materials and applying the correct rate. Our CIS Self Assessment calculator estimates the year-end position for sole traders, useful as a comparison when weighing incorporation.

If your limited company is having CIS deductions made and the EPS offset is not in use, or there is a mismatch between what has been claimed and what contractors reported on their CIS300 returns, resolving that before HMRC's annual reconciliation is worthwhile. Our CIS compliance service covers the in-year EPS process and the year-end excess-credit claim as part of an ongoing advisory relationship, not a one-off recovery exercise.

Frequently asked questions

What is the EPS and how does a limited company use it to reclaim CIS?: The Employer Payment Summary is a monthly submission within the PAYE Real Time Information system. A limited company that has had CIS deducted from payments it received reports those deductions on the EPS, and HMRC reduces the PAYE and NIC the company would otherwise remit that month by the same amount. The company nets off the CIS credit against its payroll bill in the same 30-day cycle, rather than filing a separate claim or waiting for the year end.
When must the EPS be filed to use the CIS offset?: The EPS must reach HMRC by midnight on the 19th of the month following the end of the tax month in which the CIS deductions were suffered. Tax months run to the 5th, so deductions suffered in the month ending 5 July must be reported on an EPS filed by 19 July. The reduced PAYE payment is then due by the 22nd of the same month (electronic). If the EPS is late, HMRC expects the full PAYE amount and the company must file a correcting EPS and contact the employer helpline to recover the position.
What figure goes in the CIS suffered field on the EPS?: The total CIS deductions actually withheld in that tax month, taken directly from the CIS deduction statements the contractor provided. This is the tax amount withheld, not the gross invoice value and not the labour-only portion of the invoice. Entering the gross income figure is one of the most common EPS errors and will produce a mismatch with the contractor's CIS300 monthly return, triggering an HMRC query.
What happens when CIS deducted is more than the PAYE due that month?: The surplus carries forward to the following month automatically. The EPS for each subsequent month includes both fresh deductions and any brought-forward credit. Any credit that remains unabsorbed at 5 April becomes the year-end excess. It is either offset against the Corporation Tax liability for the same accounting period or refunded by HMRC as a cash payment, with a target of 25 working days for processing once the final EPS and CT600 are submitted.
How are CIS deductions treated for Corporation Tax?: CIS deductions suffered by a limited company are treated as advance payments of Corporation Tax, not as income tax. HMRC holds the credit on the company's CT account. During the year the EPS mechanism allows the company to draw on that credit early, setting it against PAYE and NIC bills. At year end, any remaining credit is applied to the CT liability. If the CT liability is smaller than the credit, HMRC refunds the balance. Corporation Tax rates for 2026/27 are 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between those thresholds.
How does the limited-company EPS route compare to the sole-trader Self Assessment route?: A sole trader can only recover over-deducted CIS through the Self Assessment return for the tax year, which is not due until 31 January after the tax year ends. A deduction suffered in April 2026 sits inside the 2026/27 tax year, which does not end until 5 April 2027, and the return is not due until 31 January 2028. A sole trader who files at the deadline waits around 22 months to recover that April 2026 deduction. A limited company offsets each month's deductions against that month's PAYE bill, so the effective recovery cycle is 30 days. For a company with substantial CIS deductions, that difference is real working capital rather than a timing technicality.
Does a limited company need to file an EPS in months when it has no PAYE liability?: Yes. If CIS deductions were suffered in a month where the company has no PAYE or NIC due, the EPS is still required to record the credit. Skipping the EPS in a nil-PAYE month loses that month's credit until a correcting submission is made. The credit does not disappear but it is not applied until it is formally reported.
What records does a limited company need to support the EPS CIS offset?: A CIS deduction statement from each contractor who made a deduction in the relevant period. The statement must show the contractor's name and UTR, the company's UTR, the gross amount paid, the materials element, the CIS deduction amount, and the period of payment. These must be retained for at least three years from the end of the relevant tax year. HMRC requests them during compliance checks and the EPS offset becomes unsupported without them.

Most CIS subcontractors are owed money back.

The average CIS subcontractor overpays around £2,000 a year in tax deductions. Book a free call with a specialist CIS accountant. We will review your deductions, identify what you are owed, and handle the reclaim. Plain English, no jargon.

CIS Accounting for Limited Companies: The Director's Complete Guide 2026/27
Running a construction limited company under CIS is meaningfully different from operating as a sole trader. You recover CIS deductions in real time rather than waiting for a Self Assessment refund. You pay Corporation Tax rather than income tax. You extract profit through dividends taxed at 2026/27 rates. You face GPS eligibility tests measured per director rather than per business. And from April 2026 you carry new anti-fraud obligations that can affect you personally as an officer of the company. This guide synthesises all of it.