If you’ve recently registered for your Unique Taxpayer Reference (UTR) because you’re working under the Construction Industry Scheme (CIS), you’re not alone, thousands of subcontractors go through the same process each year.
CIS workers almost always overpay tax. Not because the contractor is doing anything wrong, but because the CIS system deducts a flat 20% (or 30%) without taking any of your expenses into account.
Once you have your UTR and complete your Self Assessment, HMRC calculates your actual tax position which is when many workers receive a refund.
This guide explains exactly what happens after you get your UTR, how CIS refunds are calculated, and what to do next to avoid penalties or delays.
Why CIS workers are taxed before expenses
CIS was created to prevent tax evasion in the construction sector, which is why it works differently from other types of self-employment.
Contractors take tax at source, meaning:
- They deduct 20% (or 30% if unverified) from your pay
- They send this directly to HMRC
- HMRC holds the money until you complete a Self Assessment
But CIS deductions don’t take into account:
- tools
- materials
- travel
- van costs
- fuel
- PPE
- public liability insurance
- mileage
- subscriptions
- training
- parking/tolls
These costs reduce your taxable profit and the tax deducted usually far exceeds what you actually owe.This gap is why CIS refunds are common.
Once your UTR is issued, HMRC expects a Self Assessment Tax Return
After HMRC gives you your UTR, you move onto the next stage: filing your Self Assessment Tax return.
This is where you:
- declare all CIS income
- declare all CIS tax taken
- claim legitimate business expenses
- combine PAYE work if you have it
- include any private jobs or cash work
- report mileage, fuel, and tool costs
During this process, HMRC calculates the difference between:
- CIS tax already deducted
- Tax that you actually owe (after expenses and allowances)
If you’ve had large expenses which is normal in construction you often get money back.
What CIS Workers can claim as expenses
The construction industry has some of the highest legitimate expense categories of any trade.
Common examples include:
- tools, consumables, and replacements
- PPE, safety clothing, gloves, boots
- van insurance, MOT, fuel, repairs
- mileage for travel between sites
- materials purchased for jobs
- parking, tolls, congestion charges
- union fees and professional memberships
- public liability insurance
- mobile phone bills used for work
- accounting or tax preparation costs
Each of these reduces your taxable profit.
If your expenses are substantial which they usually are the refund can be sizeable.
Why CIS Refunds are often higher than expected
Many subcontractors are surprised at how large their refund is the first year they file properly.
This happens because:
- CIS deductions assume no expenses
- construction work involves constant travel
- tools and materials are often paid for out of pocket
- subcontractors move between sites frequently
- PPE and consumables add up
- many workers also have mixed PAYE/CIS income
Once your expenses and allowances are applied, the difference between what you owe and what you’ve already paid can be significant.
When refunds are paid after you file your Tax Return
HMRC only issues refunds after the Self Assessment is submitted and processed.
Timelines depend on:
- whether HMRC requires additional ID checks
- accuracy of the return
- bank details matching HMRC records
- whether you submit early (refunds are much faster before January)
Once accepted, refunds are typically paid within:
- 5–10 working days (bank transfer)
- 2–6 weeks if HMRC conducts routine checks
Submitting early in the tax year can speed this up considerably.
Common issues that delay CIS Refunds
Some CIS workers unintentionally delay their refunds by:
- misplacing CIS statements
- declaring the wrong contractor
- not registering properly for Self Assessment
- mixing PAYE and CIS income incorrectly
- forgetting to include expenses
- using the wrong start date when registering for a UTR
- filing too close to the deadline
- having mismatched personal details (address, NI number etc.)
Even something small, like a missing CIS statement can slow everything down.
Life after your first CIS Refund
Once you’ve gone through your first year, everything becomes clearer:
- your UTR is now permanent
- you file a Self Assessment Tax Return every year
- you keep digital records more easily
- contractors treat you as verified
- tax rarely feels confusing again
- you may receive refunds annually depending on your expenses
CIS workers often find the first year the most difficult but after that, the process becomes routine.
FAQs for CIS Subcontractors
- Do I need to wait a full year before claiming my refund?
Refunds are processed once you file your tax return for that tax year.
- What if I worked for multiple contractors?
You must include all CIS statements on your return.
- Can I get a refund even if I only worked CIS part of the year?
Yes, refunds are based on your overall tax position.
- Do private cash jobs need to be included?
Yes, all income must be declared, whether CIS or private work.
Ready to register for your UTR?
If you’re working in construction or planning to start, registering early ensures you can work without delays and claim any refund you’re entitled to once the tax year ends.