How to claim back CIS deductions

How you claim back CIS deductions depends entirely on how you trade. A sole trader or partnership claims through Self Assessment, setting the deductions against the tax and National Insurance owed for the year, with anything overpaid refunded. A limited company claims through its payroll scheme, offsetting the deductions against the PAYE, National Insurance and CIS it owes as an employer, not through Corporation Tax. Either way, the payment and deduction statements from your contractors are the evidence, so you need all of them.

First, get your statements together

Every contractor who deducted from you owes you a payment and deduction statement within 14 days of the end of the tax month. Tax months run 6th to 5th, so the month ending 5 June is covered by a statement due 19 June.

Those statements are the claim. Without them you’re reconstructing a year of deductions from bank credits and guesswork, and the figures will not agree with what HMRC has been told.

Chase them monthly. A missing statement in June is one email. A missing statement in the following April is an argument with a contractor who has moved on and doesn’t much care.

Keep them with your records. Contractors have to hold their CIS records for at least 3 years after the end of the tax year, and you want yours for at least as long.

Sole trader or partnership

The deductions go on your Self Assessment return for the tax year, in the CIS section. HMRC sets them against the income tax and Class 4 National Insurance you owe on your profits.

Most subcontractors end up owed money. That’s the normal outcome rather than a windfall, and the arithmetic behind it is worth understanding: 20% is being taken off your labour turnover, while your actual tax is charged on profit after expenses, your personal allowance, and everything else you legitimately claim. Deduct 20% off the bigger number all year and you’ll usually have overpaid.

If the deductions exceed what you owe, HMRC refunds the difference after the return is processed.

Worked example

You’re a sole trader. Across the year you invoice £52,000 of labour, all subcontract, all deducted at 20%. That’s £10,400 taken off and paid to HMRC in your name.

Your allowable expenses come to £11,000, so your profit is £41,000. Say tax and National Insurance on that works out at £8,900.

You’ve already had £10,400 taken. You’re owed £1,500 back.

Now the point of the page. Had you traded through a limited company, that £10,400 would not go on a Corporation Tax return at all. It goes against your PAYE scheme. Companies that put CIS deductions through Corporation Tax end up paying their PAYE bill twice and waiting months to unpick it.

Limited company

You claim through your payroll scheme, not your company tax return.

Each month, set the CIS deductions taken from your company against what the company owes HMRC as an employer: PAYE, National Insurance, and any CIS you’ve deducted from your own subcontractors. You report the figures through your EPS, the Employer Payment Summary.

If deductions still exceed what you owe at the end of the tax year, you can ask HMRC to refund the balance or set it against other taxes the company owes.

The rule that catches people: this is a payroll offset, not a Corporation Tax deduction. Your accountant will know, but plenty of directors doing their own bookkeeping put it in the wrong place and only find out when the PAYE demand arrives.

Common mistakes

Claiming company deductions through Corporation Tax. It’s a payroll offset. Wrong box, months of unpicking.

Missing statements. They’re the evidence. Collect them as they come, not in April.

Claiming the gross figure. You claim the deduction taken, not the invoice value.

Forgetting materials came out first. The deduction was on labour, so the number is smaller than 20% of your turnover.

Waiting instead of fixing the cause. If you’re reclaiming a big refund every year, gross payment status stops the money leaving in the first place.

Do this in FieldHive

The claim is only as good as the paperwork behind it. If you deduct from your own subcontractors, produce their statements free in your browser so both sides have the record. And before you accept a statement that looks light, check what should have been deducted with the CIS tax calculator.

Aid, not advice

This guide explains the two routes for reclaiming CIS deductions so you use the right one. It is not tax advice, and the limited company route in particular interacts with your payroll and your wider position. Your accountant should handle the filing.

Routes and record-keeping checked on gov.uk August 2026: CIS deduction rates 20% / 30% / 0%; the 14-day payment and deduction statement deadline; the 3-year record retention requirement.