A CIS refund is the repayment HMRC makes when a subcontractor has had more money deducted under the Construction Industry Scheme than they actually owe in tax and National Insurance for the year.

Because CIS deductions (20% for registered subcontractors, 30% for unregistered) are taken from the labour element of each payment before any expenses or personal allowance are considered, most registered subcontractors overpay across the tax year. The deductions are an advance, not a final tax charge. Once the year-end picture is complete, the excess is refunded.

For a sole-trader subcontractor, the refund comes through Self Assessment. You file your tax return after 5 April, declare your gross CIS income (before deductions) and all allowable expenses, and HMRC calculates whether you are owed money. The typical refund for a sole-trader subcontractor runs to around £2,000 to £3,000 a year (illustrative average; individual results vary). HMRC usually processes online claims within 5 to 10 working days once the return is filed.

For a limited-company subcontractor, there is a faster route. The company can offset CIS deductions suffered against the PAYE and NIC it owes each month via an Employer Payment Summary (EPS), recovering the overpayment in real time rather than waiting up to 18 months for a year-end repayment. Where CIS suffered exceeds the company's PAYE liability, HMRC targets a repayment within 25 working days.

You can also reclaim overpaid CIS deductions for earlier years. HMRC allows claims going back four tax years from the end of the current tax year. Each back year requires either a Self Assessment return (if none was filed) or an amendment to an existing return.

  • The refund is only available to registered subcontractors. Unregistered subcontractors suffer the 30% rate and must first register before they can bring their affairs up to date efficiently.
  • You will need your CIS payment and deduction statements for every year you are claiming. Without them, HMRC cannot verify the deductions taken.

See our CIS refund service page or use the CIS refund estimator to get a rough idea of what you may be owed before you instruct anyone.