CIS Tax Refund: How Subcontractors Get Their Money Back in 2026, Step by Step

Every month the contractor takes 20% off your labour before you see it. On £40,000 of work that is £8,000 gone, taken before your personal allowance, before your van, your tools and your fuel are counted. HMRC is holding more of your money than you owe, and it will keep holding it until you ask.

A CIS tax refund is how you get it back. This guide shows why the overpayment happens, what ten typical subcontractors would be owed, and the five steps to claim, using HMRC's own rules for the 2026 to 2027 tax year. Everything here was checked on GOV.UK on 4 October 2026.

How we checked this guide

1. Rules from GOV.UK. Deduction rates, what counts and how to claim come from GOV.UK's guidance on what you must do as a CIS subcontractor.

2. This year's tax rates. The examples use the Income Tax and National Insurance rates for 6 April 2026 to 5 April 2027.

3. Arithmetic you can repeat. Every refund figure is worked out in the open.

4. April 2026 changes from tax advisers. The scheme changes are summarised from published notes by accountancy and law firms, and marked as such.

Why you overpay under CIS

GOV.UK says contractors deduct 20% from registered subcontractors and 30% from unregistered ones, and that the deductions "count as advance payments towards your tax and National Insurance bill". The word that matters is advance. The deduction is a rough estimate that ignores three things:

• Your personal allowance. The first £12,570 of profit is tax free.

• Your expenses. Tax is due on profit, and the deduction is taken from gross labour.

• The real rates. A basic-rate sole trader pays 20% Income Tax and 6% Class 4 National Insurance on profit above £12,570, not 20% of everything.

For most subcontractors the advance is bigger than the final bill, and the difference is the refund.

10 worked CIS tax refund examples

Each row is a sole trader on the 20% rate for a full tax year, with no other income.

Take the £40,000 row. Profit is £34,000. Income Tax is 20% of the £21,430 above the allowance, which is £4,286. Class 4 National Insurance is 6% of the same £21,430, which is £1,285.80. The bill is £5,571.80, the contractor has already sent HMRC £8,000, and £2,428.20 comes back.

Two lessons sit in the table. Expenses drive the refund: every extra £100 you can properly claim adds £26. And the refund shrinks as you earn more: the real rate on each extra pound of profit is 26%, more than the 20% deducted, and income above £50,270 is taxed at 40%. At £70,000 the deduction and the bill almost match.

What the 20% should and should not be taken from

GOV.UK says contractors do not take CIS deductions from:

• VAT;

• materials that you have paid for directly;

• consumable stores, meaning equipment that is now unusable;

• plant hired for the job;

• manufacturing or prefabricating materials.

So if your invoice is £1,000 of labour and £400 of materials you bought, the deduction is 20% of £1,000, which is £200. The contractor may ask for evidence of what the materials cost. Put labour and materials on separate lines of every invoice, and keep the receipts. A deduction taken from the whole £1,400 is a mistake you can ask the contractor to correct.

The 5 steps to claim

Step 1: collect your statements

Contractors must give you a payment and deduction statement within 14 days of the end of each tax month. Each one shows what you were paid and what was deducted. You need the full set for the tax year, 6 April to 5 April.

Step 2: add up two totals

Total pay before deductions, and total deductions. Check them against your bank statements. The gap between gross and what arrived should equal the deductions.

Step 3: list your expenses

Tools, protective clothing, fuel or mileage, van insurance, phone, public liability insurance, accountancy fees and materials you paid for. For the 2026 to 2027 tax year the flat mileage rate is 55p a mile for the first 10,000 business miles.

Step 4: file your Self Assessment return

GOV.UK says to record your total pay before deductions as income and the total deductions as CIS deductions. You can file any time after the tax year ends on 5 April, and the online deadline is the following 31 January. Nothing makes you wait until January: a return filed in April is a refund claimed in April.

Step 5: let HMRC work it out

HMRC calculates the tax and National Insurance due and takes off what contractors have already paid in. If you still owe tax, you pay it by 31 January. If the deductions were more than the bill, GOV.UK says simply that "HMRC will pay the money back". Give your bank details on the return so it can.

Limited companies work differently. They set CIS deductions against their PAYE bill each month through the payroll submissions, and claim any balance after the tax year ends. If you are not sure which structure suits you, see our guide to sole trader versus self-employed.

If a statement is missing

Ask the contractor first, in writing. If you still cannot get it, GOV.UK says to write to HMRC with your name, address and Unique Taxpayer Reference, the contractor's name and address, the dates of the payments and the reason you do not have the statements. Bank statements showing the net amounts help. Do not guess the figures on your return.

Three ways subcontractors lose money

• Not registering. Unregistered subcontractors lose 30%, not 20%. Registering is free and quickest online, and you need your legal business name and your Unique Taxpayer Reference. You do get the extra back in the end, but you wait a year for it.

• Not claiming expenses. Without expenses, the £40,000 example above would get back £868.20 instead of £2,428.20.

• Paying a large share to a refund firm. Some charge a percentage of the refund. Check the fee before you sign, and compare it with a fixed-fee accountant or doing the return yourself.

Gross payment status and the April 2026 changes

With gross payment status, contractors pay you in full and you settle your tax through Self Assessment. GOV.UK says you must show that you have paid your tax and National Insurance on time, that the business does construction work in the UK and is run through a bank account, and that turnover in the last 12 months, ignoring VAT and materials, was at least £30,000 for a sole trader. For partnerships and companies it is £30,000 for each partner or director, or at least £100,000 for the whole business.

Tax advisers report three changes from April 2026. Contractors must now file a return every month, including months with no payments, unless they tell HMRC in advance. HMRC can remove gross payment status immediately where it finds fraud, and the wait to reapply has grown from one year to five. And a business that knew, or should have known, that a payment was connected to fraud can be made liable for the lost tax plus a penalty of up to 30%. For an honest subcontractor the practical point is simple: keep your own tax on time and your records clean, because the status is now easier to lose.

How an AI agent helps with CIS

ChatGPT, Claude, Gemini, Microsoft Copilot, Manus and Meta's Muse can all explain the scheme. An agent can do the adding up.

• Reads the statements. Give it a year of statements as photos or files and it builds the two totals, month by month.

• Matches them to the bank. It flags any month where the money received does not match the statement.

• Sorts the expenses. From your bank export, under the headings HMRC uses.

• Estimates the refund. Before you file, so you know what to expect.

• Finds work outside the scheme. CIS covers payments from contractors. A homeowner who hires you directly is not a contractor, so nothing is deducted. On Jobbit Pro customers and Jobbit's agent send briefed, scoped jobs to professionals, and the customer's payment is held in escrow before you start.

• Free agent credits from the first day. A new account gets a 300-credit sign-up bonus on top of 100 free credits every day, with no card.

• A website when your profile is complete. Finish your Jobbit Pro profile and you get a website for your services with an enquiry form.

For more on direct work, see trade lead sites compared and how to get repeat work as a tradesperson.

Your plan for this week

• Day 1: check you are registered for CIS and on the 20% rate.

• Day 2: gather this year's statements and chase any that are missing.

• Day 3: split labour and materials on your invoice template.

• Day 4: total your expenses so far and estimate your refund from the table.

• Day 5: put 6 April in your diary as the day to file. Then create your Jobbit Pro profile and complete it to unlock your website.

If your income is over £50,000, read our guide to Making Tax Digital for sole traders, because quarterly updates now apply to you as well.

Frequently asked questions

How much CIS tax refund will I get?

It depends on your profit. In the examples above, a sole trader on the 20% rate with £30,000 of labour and £5,000 of expenses gets £2,768.20 back, and one with £50,000 and £8,000 gets £2,348.20.

When can I claim my CIS tax refund?

After the tax year ends on 5 April. File your Self Assessment return any time from 6 April. The deadline for filing online is 31 January.

How long does a CIS refund take?

HMRC does not promise a date. Filing early, online, with correct bank details and totals that match your statements gives it the least reason to delay.

Can I claim a CIS refund without statements?

Ask the contractor for copies. If you cannot get them, write to HMRC with your details, the contractor's details, the payment dates and the reason. Do not estimate.

Do I need an accountant to claim a CIS tax refund?

No. A sole trader claims through the Self Assessment return. An accountant can be worth the fee if your expenses are complicated.

What is CIS gross payment status?

It means contractors pay you without deductions. A sole trader needs at least £30,000 of construction turnover in 12 months, a business bank account and a clean record of paying tax on time.

How do I find work where 20% is not deducted?

Work directly for homeowners and small businesses that are not contractors. Create a free Jobbit Pro profile: 300 free agent credits on sign-up plus 100 a day, a website when your profile is complete, payment held in escrow before work starts and no fee until a paid job completes.