CIS tax refund calculator

How a CIS refund works

When a contractor pays you under CIS, they take a deduction from your payment and pass it to HMRC. GOV.UK says contractors deduct 20% if you are registered for the scheme and 30% if you are not, and that these deductions count as advance payments towards your tax and National Insurance bill. You don't get the money back automatically. You get credit for it when your bill is worked out.

At the end of the tax year you send in your Self Assessment return as usual. You record your total pay before deductions as income and the total deductions as "CIS deductions". HMRC works out how much tax you owe and takes off the CIS deductions. If you still owe, you pay by 31 January after the tax year ends. If you have paid too much, HMRC pays the money back. That is the refund. You will need the monthly payment and deduction statements your contractors gave you, so keep them.

Why many subcontractors get a refund

CIS takes 20% of the labour you charge, with no allowance for your Personal Allowance, your expenses or the lower real rate of tax on the first part of your income. Your real bill is worked out on profit after expenses and after the £12,570 allowance. If your profit is modest, the real bill is often smaller than the 20% already taken, so there's a refund. The less you earn, the bigger the effect. If your profit is high, you may have a balance to pay.

Worked examples

1. A full year. You were paid £37,950 before CIS (£165 × 5 days × 46 weeks). Your contractors took 20%, which is £7,590. Expenses were £3,000, so profit is £34,950. Income Tax is £4,476.00 and Class 4 NI £1,342.80, a bill of £5,818.80. After crediting £7,590 deducted, the refund is £1,771.20.

2. Registered late, 30% taken. Same year, but you were not registered with CIS and 30% (£11,385) was taken. The bill is the same £5,818.80, so the refund is £5,566.20. This is one reason to register: the 10% extra comes back, but only after the year ends.

3. A part year. You worked 20 weeks at £165 a day for 5 days a week: £16,500 before CIS, with £3,300 deducted and £500 expenses. Profit is £16,000. Income Tax: (£16,000 − £12,570) × 20% = £686.00. Class 4: 6% × £3,430 = £205.80. Bill £891.80, so the refund is £2,408.20.

4. Higher earnings. £82,800 paid with £16,560 deducted and £8,000 expenses gives a profit of £74,800 and a bill of £20,104.60, so you'd still owe about £3,544.60 on top.

How to claim

1. After 5 April: file your Self Assessment return, putting your gross pay as income and your total deductions as CIS deductions. HMRC pays any refund.
2. During the tax year: GOV.UK says you may be able to claim back deductions already taken this tax year if you stop trading, using the sole trader or partner form (CIS40). Otherwise, use your tax return after the year ends.
3. If you are a limited company: the process is different. You use your company's payroll scheme (FPS and EPS) to set deductions against your PAYE bill, then claim a refund of anything left after the tax year.

Our guide to claiming back CIS deductions walks through the steps in more detail, and the self-employed tax calculator shows your take-home. If you want to stop deductions at source, see CIS gross payment status.

Check your figures before you rely on them

The refund depends on accurate numbers. Add up the deductions from each monthly statement and check them against your own invoices. HMRC checks them against what contractors have reported. If a contractor hasn't given you a statement, ask for it. Keep records of your invoices: BillMyWeek stores each invoice with its CIS deduction so you can total the year.