Most CIS subcontractors are due money back at the end of the tax year. Not because of a loophole — because of how the scheme works. Here's why, and how to make sure you get every pound.

Why refunds happen

CIS deducts 20% (or 30%) from your gross labour all year. But your actual tax is calculated on your profit — income minus allowable expenses — and only after your Personal Allowance. The deductions ignore both. So unless you had a very high-profit year, the amount deducted usually beats the amount you owe, and the difference is refunded.

What you need

  • Every CIS statement from every contractor — these prove your deductions.
  • A complete record of your income for the year.
  • Your business expenses, with evidence — every legitimate expense increases the refund.
  • Your UTR and (for the fastest refunds) accurate bank details on your return.

How the claim works

Sole traders claim through their Self Assessment return (or, as Making Tax Digital phases in, the year-end final declaration): you declare your income and expenses, enter your total CIS deductions, and HMRC calculates the balance. If the deductions exceed the tax due, the difference comes back to you — typically within weeks of filing, which is one very good reason to file early rather than in January.

The refund killers

Missing CIS statements (chase your contractor — they must provide them), lost expense receipts, and materials mixed into labour on invoices are the three classic ways subcontractors shrink their own refunds. Each missing £100 of expenses costs you roughly £29 in extra tax and NI at basic rate.

Limited company subcontractors

If you operate through a limited company, CIS deductions are offset against your company's PAYE liabilities in-year instead — a different mechanism with its own rules. If that's you, talk to your accountant; SubReady is designed for sole traders.

This article is general information for UK sole traders and subcontractors, not tax, accounting or financial advice. Rules change — check current HMRC guidance or speak to an accountant about your own position.