What CIS actually does
Under the Construction Industry Scheme, contractors in the UK construction sector must deduct tax at source from payments to their subcontractors. If you are the subcontractor, that money has already gone to HMRC on your behalf. You get it back (or part of it) through your Self Assessment return.
The deduction rate depends on your status
- 20% if you are CIS-registered and HMRC has verified you. This is the usual rate for most subcontractors.
- 30% if you are not registered under CIS. Register as soon as possible to drop to 20%.
- 0% if you have gross-payment status, which has strict turnover and compliance criteria.
How the reconciliation works
Every month, your contractor should give you a CIS statement showing gross pay, deductions, and net pay. Keep every single one. These are your proof when it comes to filing.
On your Self Assessment, you declare your gross income from CIS work (not net), then claim the total deductions as tax already paid. If the deductions were more than your final tax bill plus Class 2 and Class 4 National Insurance for the year, HMRC refunds the difference.
Why rebates are the common outcome
For most sole-trader subcontractors with normal running expenses, 20% deducted at source is more than their eventual tax bill works out to. The 20% applies to gross income, but you only pay tax on profit after expenses. So the maths usually leaves HMRC owing you money, not the other way round.
What boosts the rebate
Anything that reduces your taxable profit:
- Tools and consumables.
- PPE and work clothing.
- Mileage to each site (not your normal commute).
- Phone and admin costs, work portion only.
- Public liability insurance.
- Accountant fees for preparing the return.
Keep two things
Every receipt, and every CIS statement. The two together are what we use to work out exactly what you are owed. HMRC usually pays the rebate into your bank within three to four weeks of the return being filed.