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Published on 5 June 2023

CIS subcontractors - submit your tax return early for your tax refund

Although they are self-employed, Construction Industry Scheme (CIS) workers often have an amount deducted from their payments before they receive them. This is to cover their tax and National Insurance contributions (NIC). For many CIS workers the amount deducted will be too high, and they will be due a refund when they submit their tax return.

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Why have I overpaid tax?

If you are a CIS registered subcontractor, your contractor should usually deduct 20% each time you are paid. This ‘deduction at source’ is then paid to HMRC as an advance payment of your tax and NIC. The deduction at source should only be applied to the amount you have earned working and not against any reimbursement of costs such as materials. We explain more about how these deductions are calculated on our webpage.

If you are not CIS registered but are doing subcontractor work, then your contractor should make CIS deductions at 30%. If you have been granted Gross Payment Status, then your contactor should not make any deductions at source.

Refunds arise when the deductions taken at source are more than the tax and NIC you owe for that tax year. This usually happens to lower-earning CIS workers because their deductions at source do not take into account their business expenses, personal allowance or NIC Class 4 profit threshold. HMRC will only know you are due a refund when you submit a Self Assessment tax return as this allows for a full reconciliation of your tax position.  

How do I get a tax refund?

You need to complete and submit your tax return for the 2022/23 tax year so any refund can be processed by HMRC and paid to you. You do not need to wait until the self-assessment online deadline (usually 31st January following the end of the tax year) to submit your tax return – you can submit it any time after 6 April 2023. The following top tips may be helpful when completing your tax return:

  • You do not have to use a professional adviser or an agent specialising in tax refunds – it is entirely your choice whether you do. Many self-employed people manage to complete their annual tax return themselves and there’s lots of guidance available to help you (see below).

  • If you do decide to use an agent, beware of the risks of unscrupulous agents. If you do want to use an agent, you should do some research and use one affiliated with a professional body such as Chartered Institute of Taxation or the Association of Taxation Technicians. 

  • You can file a tax return any time after 6 April and the quickest way to receive your tax refund is to file an online tax return rather than a paper tax return. We explain what log-in details you will need to complete your tax return online here.

  • Make sure you include the bank details of where you want your tax refund to be repaid – this will speed up the repayment rather than waiting for HMRC to send you a cheque. We set out a few instances where HMRC may not follow your repayment instructions in our guidance. ​

  • Make sure HMRC have your up-to-date contact details so that they can contact you if they have a question about your tax return or repayment. You should update your address on your Business or Personal Tax Account and on your tax return.

  • Remember to include all the relevant information on your tax return – this includes any other taxable income you may have earned in the tax year, perhaps from employment or a different self-employment. Also, consider what business expenses you have incurred while being a CIS worker- our webpage explains the most common ones.

  • Try and verify the amount that has been deducted at source from the monthly statements that should have been provided to you by your contractor. Note that contractors do not need to provide an overall annual statement summarising everything, but some contractors do this as a matter of good practice. One of the reasons CIS Self Assessment tax returns get held up is because the amount entered on the tax return for ‘deductions under the CIS’, doesn’t match what HMRC have on their records.

  • If you don’t have any or all of the monthly statements, you should ask your contractor for them – they have a legal obligation to provide them to you. If all else fails, there is an article on AccountingWeb that explains what help HMRC may be able to provide.  

How quickly will I receive my tax refund?

The sooner you submit your tax return, the sooner HMRC can process any tax refund due. Although many people wait until nearer the online filing deadline (January 31) to file their tax return, if you are due a tax repayment then its beneficial to submit your tax return as quickly as possible.

After submitting your tax return, HMRC will process any repayment due. However, sometimes repayments are delayed when HMRC perform additional security checks - this can mean waiting around six weeks for your repayment. It is possible to check the status of your tax repayment on HMRC online services and also on this tool on GOV.UK.  

Where can I get extra help with my CIS tax affairs?

There is information on our website which should help you understand your tax position and how to complete your Self Assessment tax return. In particular, our pages on What is the Construction Industry Scheme? and How do I claim back tax under the Construction Industry Scheme (CIS)? may be helpful.

If you need additional help then our page on ‘getting help’ explains how to obtain professional advice or help from the voluntary sector, such as the tax charity- TaxAid.

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