A guide to CIS Tax Refunds

A Guide to Construction Industry Scheme (CIS) Refunds

Self-employed sub-contractors that are registered on the Construction Industry Scheme (CIS) may be entitled to a tax refund. Many sub-contractors are unsure as to what to claim and how to claim through their tax returns, and so they may wish to seek help and advice from an expert.

What is the Construction Industry Scheme?

CIS is a method employed by HMRC to collect tax from sub-contractors working in the construction industry. The main contractor will deduct tax before paying their sub-contractors, and pass the amount deducted to HMRC. Sub-contractors should register for CIS and complete their tax returns annually, wherein they can claim back allowable expenses in the form of a rebate.

How do I know if I am part of the Construction Industry Scheme?

You should have details of your registration for the scheme, but you can also see from your payment statements whether you are being paid as part of CIS or as an employee through PAYE.

What is an allowable expense?

There is a wide range of expenses that can be reclaimed on CIS tax returns. However, the most common, and therefore most likely ones which will apply to you are:

  • Business travel. This could be using public transport or fuel for your own vehicle.
  • Tools and equipment. Sub-contractors usually use their own tools, but you could also claim for the costs of protective clothing, if required.
  • Accommodation and subsistence. If you need to stay away from home to work on site, you can claim the costs of your accommodation and meals.
  • Home use. A proportion of your household bills, including mobile phone bills, can often be claimed, but specific advice on your situation should be sought before including these.
  • Professional Fees. Where you pay for services from an accountant, for example, these fees can be reclaimed.

Whether or not you seek expert advice, you should keep a record of the travel you do for work as well as receipts for all business-related expenses. This information will be essential to accurately complete your tax returns.

How much refund will I get?

It will be different for everyone as all circumstances are unique, however, as a guide, the average refund is around £2,300. In order to work out how much of a refund you can expect, you will need to gather information about the following:

  • Your total income. This would not just be through CIS but other sources of income as well, such as employment.
  • The total tax you have already paid
  • A comprehensive list of all expenses incurred.

There are several free online calculators which you may be able to use to help, although the final figure can only be ascertained by completing tax returns.

What documents do I need to keep?

There are a few documents you will need to help you, or your adviser, to complete your tax returns. These include:

  • Pay statements that show how much income you have received and any tax paid.
  • PAYE or P45 certificates if you have been employed.
  • Details of income received from property or investments.
  • Details of income received from jobseekers’ allowance, if you have claimed this at any point during the year.
  • Receipts, or a detailed record of your expenses during the year.

If you keep adequate records and seek advice where you feel you need it, you can ensure you are not overpaying under the Construction Industry Scheme and you are likely to find a welcome rebate being paid into your account once your return is processed.

For help and advice with your tax return, speak to one of our experienced accountants today or download the Subbie Tax App on iOS or Android.