How Do I Claim My CIS Refund From HMRC? Your Essential Guide to Getting Your Money Back

Are you a subcontractor in the construction industry feeling like you’re overpaying tax? If you’ve had tax deducted under the Construction Industry Scheme (CIS), you might be due a valuable CIS refund from HMRC! It’s incredibly common for subcontractors to find they’ve paid more tax than necessary, and reclaiming your rightful money back on your CIS tax return is simpler than you might think, especially with the right guidance.

At Worthwhile Accountancy, we frequently help Norfolk-based subcontractors just like you navigate the complexities of CIS. We understand that those deductions made at source don’t always account for your legitimate business expenses or your personal allowance, leading to an overpayment. Don’t leave your hard-earned money with HMRC – let’s explore how you can claim what’s owed to you, ensuring you keep more of your profits.

Understanding Your CIS Refund

A CIS refund, also known as a CIS tax rebate, is essentially the amount of tax you’ve overpaid to HMRC through the Construction Industry Scheme. Unlike PAYE, where your employer might adjust deductions for your tax code, CIS deductions are made at a flat rate on your gross income (minus materials), not your final taxable profit.

You’re commonly due a refund for reasons such as:

1. Expenses Not Accounted For. The deductions are taken before your legitimate business expenses (like tools, vehicle costs, training, and materials) are considered. When these expenses are factored in, your taxable profit is lower, meaning you’ve likely paid too much tax upfront.
2. Personal Allowance. Your personal allowance (the amount of income you can earn tax-free each year) isn’t considered when contractors make CIS deductions.
3. Fluctuating Income. Periods of lower earnings or significant one-off expenses can also lead to an overpayment.

If you’re a self-employed subcontractor who has worked under CIS and had tax deducted from your payments, you are highly likely to be eligible for a CIS refund.

How to Claim Your CIS Refund from HMRC

For most self-employed subcontractors, reclaiming your CIS tax rebate primarily happens through your annual Self Assessment tax return. Here’s how Worthwhile Accountancy advises clients to approach it:

1. Gather Your Documents

CIS Deduction Statements. These are your proof of the tax you’ve already suffered. Ensure you have one for each payment received from every contractor during the tax year (6th April to 5th April). These are vital for your CIS refund claim.

Records of All Business Expenses. Keep meticulous records (invoices, receipts, bank statements) for all your allowable business expenses. This includes tools, materials, fuel, vehicle running costs, insurance, training, protective equipment, and home office costs. These are key to reducing your taxable profit and increasing your potential money back on your CIS tax return.

Your Unique Taxpayer Reference (UTR) and National Insurance Number.

Your bank account details (for the refund).

2. Prepare Your Income and Expenses

Worthwhile Accountancy will accurately total all your CIS income from your deduction statements and categorise and total all your allowable business expenses. This is where many subcontractors miss out on significant refunds. Worthwhile Accountancy can help you identify all eligible expenses to maximise your CIS tax rebate.

3. Complete Your Self Assessment Tax Return

We will then look at your other income and incorporate this into a self assessment tax return and submit on your behalf. The online submission deadline is typically 31st January, following the end of the tax year. For paper returns, the deadline is 31st October. Once this has been submitted, we will then request the refund. This is the official channel for most self-employed subcontractors to claim their CIS refund.

At Worthwhile Accountancy, we leverage our expertise as Xero and QuickBooks advisors to streamline your record-keeping, making your Self Assessment preparation significantly easier and more accurate.

4. Await Your CIS Refund

Once your return is submitted and processed, HMRC typically issues CIS refunds within 2-8 weeks for online submissions. The refund is usually paid directly into the bank account you provide.

Claiming Your Money Back on Your CIS Tax Return for Your Limited Company

For subcontractors operating as a limited company, the process for reclaiming CIS deductions differs slightly from that of sole traders. CIS deductions suffered by a limited company are generally offset against the company’s PAYE and National Insurance liabilities.

Any overpayment of CIS deductions can be reclaimed via your Employer Payment Summary (EPS) submitted through your payroll system. Alternatively, any outstanding refund will be reconciled at the year-end when your company’s Corporation Tax liability is calculated. It’s generally not directly reclaimed via the Corporation Tax return (CT600) itself in the same way as a sole trader’s Self Assessment.

Worthwhile Accountancy’s Limited Company Accountants regularly assist construction firms with their CIS and payroll obligations, ensuring seamless compliance and efficient refund claims.

5 Expert Tips to Maximise Your CIS Tax Rebate

1. File Early. The sooner you file your Self Assessment tax return after the tax year ends (6th April), the quicker HMRC can process your claim and issue your refund.

2. Keep Meticulous Records. This cannot be stressed enough. Accurate and organised records of all income and expenses are the backbone of a successful CIS refund claim. Consider using cloud accounting software like Xero or QuickBooks, which we specialise in, to keep everything in order.

3. Verify All Statements. Ensure you have all your CIS deduction statements. If a contractor hasn’t provided one, request it promptly.

4. Claim All Eligible Expenses. Don’t miss out on any legitimate business expenses that can reduce your taxable profit. This is often where the biggest potential for a larger CIS tax rebate lies.

5. Consider Professional Help. If you’re unsure about any aspect of the process or want to ensure you’re claiming everything you’re genuinely entitled to, consulting an expert CIS accountant is highly recommended. Our team is specifically experienced with the nuances of the Construction Industry Scheme.

For a deeper dive into how our specialists can streamline your CIS affairs, explore our dedicated CIS Accountant Norfolk services page.

5 Common Mistakes to Avoid When Claiming a CIS Refund

1. Not Keeping Accurate Records. The biggest pitfall. Without proper records of income and expenses, your claim may be delayed or reduced.

2. Filing Late. Missing the Self Assessment deadline not only delays your refund but can also incur penalties from HMRC.

3. Not Claiming All Eligible Business Expenses. Many subcontractors miss out on significant money back on their CIS tax return by not identifying and claiming all allowable business costs.

4. Not Being Registered with HMRC for CIS. If you’re an unregistered subcontractor, deductions are made at a higher rate (30%), and claiming a refund can be more complicated.

5. Failing to Include All CIS Deductions on the Tax Return. Every deduction suffered must be declared to ensure it’s offset against your tax liability.

Working with an experienced CIS Accountant like those at Worthwhile Accountancy can help you sidestep these common issues and ensure a smooth, maximised refund process.