Key facts
- CIS deductions are not a final tax charge — they are advance payments towards your tax liability.
- Sole traders and individuals reclaim CIS deductions through their Self Assessment tax return.
- Limited companies offset CIS deductions against PAYE, NICs, student loan deductions, and CIS liabilities first, then against Corporation Tax.
- You need your payment and deduction statements from contractors to claim the correct amount.
- If your CIS deductions exceed your total tax liability, you will receive a repayment from HMRC.
Understanding CIS Deduction Reclaims
When a contractor deducts CIS from your payments and sends it to HMRC, that money is held on account as advance payments towards your tax bill. It is not a tax in itself — it is a prepayment.[1]
At the end of the tax year, you calculate your actual tax liability. The CIS deductions are then offset against that liability. If the deductions exceed what you owe, you receive a refund. If they are less than your liability, you pay the difference.
Example: You have £6,000 in CIS deductions for the year. Your actual Income Tax and NICs liability is £4,500. HMRC refunds the £1,500 difference. If your liability was £8,000, you would pay the remaining £2,000.
Reclaiming as a Sole Trader or Individual
Sole traders and self-employed individuals reclaim CIS deductions through their Self Assessment tax return:[1]
- Gather your payment and deduction statements from all contractors you worked for during the tax year
- Add up the total CIS deductions suffered during the tax year (6 April to 5 April)
- Enter the total on your Self Assessment return — on the self-employment pages (SA103S or SA103F), there is a specific box for CIS deductions
- Submit your return — HMRC calculates whether you are owed a refund or have further tax to pay
- Receive your refund or pay the balance by 31 January
Where to Enter CIS Deductions on the SA Return
| Form | Box | Description |
|---|---|---|
| SA103S (short self-employment) | Box 21 | “CIS deductions made from your income as a subcontractor” |
| SA103F (full self-employment) | Box 81 | “CIS deductions made from your income as a subcontractor” |
Tip: File your Self Assessment return as early as possible after 6 April. Early filers often receive their CIS refunds within 2–4 weeks, compared to the rush of January filers who may wait longer.
Reclaiming as a Limited Company
Limited company subcontractors follow a different process. CIS deductions suffered are offset in a specific order:[3]
- PAYE tax owed by the company (as an employer)
- Class 1 NICs (employer and employee)
- Student loan deductions
- CIS deductions the company owes as a contractor (if it is also a CIS contractor)
- Corporation Tax — any remaining balance is offset against the company’s CT liability
The company reports CIS deductions suffered on its Employer Payment Summary (EPS), which is submitted through RTI. This allows HMRC to reduce the company’s monthly PAYE/NIC bill by the amount of CIS deductions suffered.
Claiming via the EPS
Each month, the company submits an EPS to HMRC declaring:
- The total CIS deductions suffered during the tax month
- HMRC reduces the company’s PAYE/NIC liability for that month accordingly
- If CIS deductions exceed the PAYE/NIC liability, the excess is carried forward to the next month
Claiming via Corporation Tax
If, at the end of the tax year, the company still has unrecovered CIS deductions (i.e. the deductions exceeded total PAYE/NICs for the year), the remainder is offset against Corporation Tax on the company’s CT600 return.[3]
In-Year Repayments
Sole traders cannot normally reclaim CIS deductions during the tax year — they must wait until they file their Self Assessment return. However, in certain circumstances, HMRC may make an in-year repayment:[4]
- You have ceased trading during the tax year
- You have no further construction income expected
- You can demonstrate that the CIS deductions will clearly exceed your total tax liability
Apply to HMRC for an in-year repayment using form CIS40 (or by contacting the CIS helpline).
Evidence You Need
To reclaim CIS deductions, you need:[1]
- Payment and deduction statements from every contractor you worked for (these show the gross payment, materials, deduction amount, and deduction rate)
- Your business records showing income, expenses, and profit
- Bank statements confirming net payments received
If you have lost statements, contact the contractor for duplicates. If the contractor cannot help, contact HMRC — they hold records of CIS deductions reported by contractors against your UTR.
Common Reclaim Issues
| Issue | Cause | Solution |
|---|---|---|
| HMRC says deductions are lower than claimed | Contractor reported wrong UTR or failed to file a CIS return | Contact the contractor; ask them to correct their CIS return |
| Refund delayed | HMRC compliance check or return query | Respond promptly to any HMRC correspondence |
| No record of deductions at HMRC | Contractor failed to file CIS returns | Provide payment and deduction statements as evidence; HMRC can investigate |
| Deduction statements missing | Lost or not provided by contractor | Request duplicates from contractor; contact HMRC for their records |
Frequently Asked Questions
How do I get back CIS deductions?
If you are a sole trader, you claim CIS deductions back through your Self Assessment tax return. Enter the total CIS deductions suffered on the employment pages or self-employment pages. If the deductions exceed your tax liability, HMRC will refund the difference. Limited companies follow a different process — they offset deductions against monthly PAYE/NIC liabilities.
When will I receive my CIS refund?
For sole traders filing Self Assessment, refunds are typically processed within a few weeks of filing. If you file online early (before October), refunds tend to be processed faster. For limited companies, offsets happen monthly against PAYE/NIC liabilities, with any remaining balance addressed through the Corporation Tax return.
What if I have lost my payment and deduction statements?
Contact the contractors who paid you and ask for duplicate statements. If that is not possible, contact HMRC — they hold records of CIS deductions reported by contractors. HMRC can provide details of deductions recorded against your UTR, though this takes time.
Can I claim CIS deductions as a business expense?
No. CIS deductions are not a business expense — they are prepayments of tax. You do not deduct them from your business profits. Instead, you claim them as a credit against your tax liability on your Self Assessment or Corporation Tax return.
Further Reading
- CIS and Self Assessment — detailed guide to reporting CIS on your tax return
- CIS for Limited Company Subcontractors — the company offset process in detail
- CIS Deduction Rates (20%, 30%, 0%) — understanding what has been deducted
- Registering as a CIS Subcontractor — ensuring the correct deduction rate is applied
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