If you’re working in construction as a subcontractor and fall under the Construction Industry Scheme (CIS), your contractor likely deducts tax from your payments. While this helps to ensure your compliance with HMRC rules, it often means that you also pay more tax than necessary, and that you might be due a refund. Let’s look at how this refund process works and how our construction accountants can help.
Who qualifies for a CIS tax refund?
If you’re self-employed in the construction industry and earning a modest income, you may be entitled to a refund. This is because CIS deductions are taken before your personal allowance and allowable business expenses are considered, meaning you could have overpaid tax.
When you file your self-assessment tax return, you can claim back costs that are wholly and exclusively related to your construction work. This is why it’s important to keep detailed records and receipts, as HMRC may request evidence to verify your claims. Don’t include personal spending or anything you didn’t actually pay for — submitting false expenses is considered serious misconduct and could lead to penalties.
Ways to claim your CIS tax refund
You can claim a CIS refund through your self-assessment tax return. Once you’ve filed it, HMRC will calculate your refund based on your income, tax paid, and allowable expenses.
You also have a few other options for claiming your CIS refund:
Use a tax agent
Many people hire tax agents to help with their self-assessment, especially when the process feels complex. If you do, read the fine print. Some agents — especially those focused on securing refunds — may ask HMRC to send your refund to them first. They’ll then deduct their fee before transferring the remainder to you.
Claim in-year
If you’ve stopped working in construction mid-tax year and your records are up to date, you may be able to request a refund before the tax year ends. You’ll need to complete form CIS40, which you’ll find on GOV.UK. Our construction accountants can also help you with the process.
Even if you get a refund this way, you’ll still need to file your full self-assessment tax return for that year. The refunded amount should be included in the return as a provisional payment received.
Let experts handle it for you
Claiming your refund doesn’t have to be stressful when you have our construction accountants to guide you through every step. Call 0208 914 8887 to schedule your free initial consultation here at Allenby Accountants and see how we can help you get back what you’re owed.
