CIS Subcontractors Accounting Guide: Expenses, Tax Returns, and CIS Tax Refunds

For self-employed subcontractors in the construction industry, keeping on top of your tax affairs can feel like a full-time job in itself. If you're registered under the Construction Industry Scheme (CIS), you're probably no stranger to having 20% deducted from your pay before it even hits your account. But here’s the good news - you might be owed a substantial tax rebate.

In this guide, we’ll break down what you can claim, how the tax return process works, and why getting your paperwork in early can mean a quicker refund.

What Is the Construction Industry Scheme (CIS)?

The CIS is a tax deduction scheme designed for contractors and subcontractors working in construction. Under the scheme, contractors deduct money from a subcontractor’s payments and pass it directly to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Subcontractors registered with the CIS have 20% deducted at source, while those not registered are hit with 30% - a significant difference. But here’s where many subcontractors find themselves confused: despite those deductions, you still need to file a tax return every year. And in most cases, you’ve probably overpaid tax - which means you’re due a refund.

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What Expenses Can CIS Subcontractors Claim?

Under CIS, you can deduct wholly and exclusively incurred business expenses when calculating your taxable profits. These include the following expenses:

✅ Eligible CIS Subcontractor Expenses

• Tools and equipment: drills, saws, ladders, hand tools, batteries etc.
• Protective clothing (PPE): safety boots, high-vis jackets, hard hats.
• Vehicle costs:
  
  • Fuel for business travel
  • Maintenance and servicing
  • Insurance, road tax
  • Mileage (using HMRC-approved rates)
• Subsistence, travel & accommodation: hotel stays, meals (while away from home), train tickets.
• Plant hire and consumables: if you hire scaffolding, mixers, compressors or fuel for hired plant, these count as materials for deduction purposes
• Insurance: public liability, tool van, professional indemnity.
• Administrative costs: phone, broadband, software, stationery, home office usage.
• Training and certification: health & safety courses, accountancy, CIS-specific training.

❌ Non‑Claimable Items

• Personal uniforms or clothing (e.g. jeans, T-shirts) unless required as PPE.
• Meals when at home or local routine meals.
• Commuting expenses to your usual workplace.
• Non-business-related insurance or personal travel.
• Furniture or “general-purpose” laptops not used exclusively for business.

What Counts Separately in CIS Payments

The CIS scheme treats some costs differently - the contractor may reimburse or pay for them separately, so they don’t affect CIS deductions. This includes:

• VAT charged on invoices (something subcontractors must collect separately).
• Consumable materials that become unusable (e.g. screws, nails).
• Plant hire - when booked by the contractor.
• Materials supplied directly by your contractor.
• CITB training levy (construction-industry training fee).
• Fuel used in these supplied plant items.

These fall outside the CIS deduction base (commonly known as “gross exempt payments”) and should appear on the CIS statement from your contractor

For an official breakdown of what counts as allowable CIS contractor expenses, visit HMRC’s CIS subcontractor guide.

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Filing a Construction Industry Scheme Tax Return

Even if you’ve had tax deducted already, you must still submit a Self Assessment tax return each year - typically due by 31 January for the previous tax year ending 5 April.

When preparing your construction industry scheme tax return, you’ll need:

• Your Unique Taxpayer Reference (UTR) number
• CIS deduction statements from contractors
• Receipts or records of business expenses
• Bank statements, if relevant

You can file online through HMRC, use commercial software, or work with a CIS-savvy accountant (which, frankly, most contractors find far less stressful!).

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How CIS Contractors Can Get a Tax Rebate

The magic moment. If your total tax deducted through CIS is more than your final tax bill, you are eligible for a refund -  this is your CIS contractor rebate.

Let’s say you earned £35,000 and had 20% deducted (£7,000). Once expenses and personal allowances are accounted for, your actual tax bill might only be £3,000 - leaving a £4,000 refund due to you. 

Refunds are typically processed within 8–12 weeks (though this can vary), although you  must have accurate CIS deduction statements. Late or incorrect returns can delay your refund so it’s vital to get it in on time!

According to HMRC, more than £100 million in tax refunds is processed for CIS subcontractors annually. That’s money back in your pocket - if you file correctly.

CIS Contractor Rebate: Common Pitfalls

Unfortunately, many subcontractors miss out on refunds due to small errors. Some of the most common mistakes include:

• Forgetting to include all CIS deduction statements
• Claiming ineligible expenses (like everyday clothes or meals)
• Failing to register with HMRC properly
• Falling for "fast refund" scams from unregulated agents

That’s why it pays to work with a trusted accountant who knows how to maximise your rebate while keeping you compliant.

Why Submit Your Tax Return Early?

There’s a popular myth that you must wait until January to file your return. Not true. In fact, the earlier you file, the sooner your rebate will arrive.

Here’s why filing an early tax return in the construction industry is smart:

• You receive your refund months before the January rush
• You avoid last-minute stress or penalties
• It gives you time to plan for any payments due
• HMRC processing times are often quicker in spring and summer

Filing in May or June could mean a refund in your bank by early summer - handy timing for holiday season or reinvestment in your business.

Why Work With a Specialist CIS Accountant?

Navigating the tax system can be complex, especially if you’re juggling site work, tools, invoices, and travel. A good accountant does more than just crunch numbers - they help you maximise your tax refund, stay organised with HMRC submissions and ultimately get peace of mind for your finances as a CIS subcontractor.

At Linggard and Thomas Accountants, one of our specialisms is working with clients in the construction industry such as CIS subcontractors.

Want help filing your return or claiming your rebate? Contact us today for straightforward, stress-free tax support.