Why do refunds arise so often?
Deductions are taken from gross labour without regard to your personal allowance or business expenses. Once those are applied in the tax return, the tax actually due is usually lower than the amount already deducted.
Subcontractors
Construction Industry Scheme support
Under CIS, contractors deduct tax at source before paying you. Those deductions are payments on account of your own tax bill — and frequently exceed it, leaving a refund due.
What is included
- CIS deduction statements reconciled against contractor records
- Self Assessment returns claiming CIS tax already suffered
- Refund claims tracked through to payment
- Gross payment status applications and compliance reviews
- Monthly CIS returns where you engage your own subcontractors
- Verification of subcontractors with HMRC
- Materials, plant and travel cost treatment
- Advice on trading as a sole trader or through a limited company
How CIS deductions work
20%
Standard deduction rate for subcontractors registered under CIS.
30%
Higher rate applied where the subcontractor is not registered or verified.
0%
Deduction rate for subcontractors holding gross payment status.
Deductions apply to labour only. Materials, plant hire and VAT are excluded from the calculation, so invoices should separate those elements clearly.
Common questions
What records should I keep?
Every monthly CIS payment and deduction statement from each contractor, plus invoices, materials receipts, fuel and mileage records, tool purchases and insurance documents.
Should I consider gross payment status?
Gross status improves cash flow by removing deductions at source, but requires meeting turnover, business and compliance tests, and staying up to date with all filings and payments thereafter.