by Asim Abbas
11 November 2026 
CIS explained: deductions, refunds and gross payment status
CIS explained: deductions, refunds and gross payment status
If you work in construction as a subcontractor, the Construction Industry Scheme (CIS) means contractors take tax off your pay before you get it.
- Registered subcontractors have 20% deducted from labour
- Unregistered subcontractors have 30% deducted
- Gross payment status means no deductions
- Most subcontractors are owed a refund
Most subcontractors overpay through CIS, which is why a tax return so often brings a refund.
This guide explains how CIS works for subcontractors and contractors, how to claim your refund and how to get paid gross.
How CIS works
Contractors must check each subcontractor’s status with HMRC, deduct tax from the labour part of payments and pay it to HMRC monthly. Materials, VAT and equipment hire aren’t subject to deductions.
| Subcontractor status | Deduction |
|---|---|
| Registered for CIS | 20% |
| Not registered | 30% |
| Gross payment status | 0% |
Why most subcontractors get a refund
The 20% deduction ignores your personal allowance and your expenses. When you file your tax return, your real tax is worked out on profit, and the CIS deducted is set against it.
You earn £40,000 of labour income with £8,000 deducted. After £6,000 of tools, van and phone costs, your profit is £34,000. Income Tax and Class 4 National Insurance come to about £5,572, so you’re owed roughly £2,428.
CIS tax rebate calculator
See how much you could get back.
How to claim your refund
- Collect your monthly CIS statements from every contractor
- Total your expenses: tools, protective clothing, van or mileage, phone, training
- File your Self Assessment return as soon as the tax year ends
- HMRC repays the difference, usually within weeks of processing
Limited company subcontractors reclaim CIS deductions through the company’s payroll submissions instead.
Getting gross payment status
To be paid without deductions, you must pass three tests:
- Business test: you run a construction business in the UK through a bank account
- Turnover test: usually at least £30,000 a year of construction labour per individual, excluding VAT and materials
- Compliance test: your tax returns and payments have been on time
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179If you’re a contractor
You must register as a contractor, verify subcontractors, make deductions, file monthly returns by the 19th of each month and give statements. Late monthly returns attract penalties even if no payments were made. The VAT domestic reverse charge also applies to most construction services between VAT-registered businesses.
Our CIS service handles refunds and monthly returns, and HMRC’s guide is on GOV.UK.
What should I do next?
To cut deductions from 30% to 20%.
You need them for your return.
They increase your refund.
We file CIS returns and chase refunds.
Frequently Asked Questions
How much CIS refund will I get?
It depends on your income and expenses. Many subcontractors get £1,000 to £3,000 back.
When can I claim my CIS refund?
After the tax year ends on 5 April. Filing early in April or May gets your money back sooner.
Is CIS deducted from materials?
No. Deductions only apply to the labour part of the payment.
Can I claim CIS refunds for past years?
Usually yes, up to four years back.
What happens if I’m not registered for CIS?
Contractors must deduct 30% instead of 20%, so register as soon as possible.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Ali Imran
I’m Ali Imran, an accountant at Wingate Accountants. I help sole traders, landlords and directors get their returns filed early and accurately, without the last-minute panic.
