How the refund maths works
- Annual labour income: e.g. £40,000 from contractors.
- CIS deducted at source: £8,000 (20% × £40,000).
- Allowable expenses: e.g. £8,000 (vehicle, fuel, tools, materials cost not separately invoiced, protective clothing, phone, home office, accountant fees).
- Taxable profit: £32,000.
- Personal allowance: £12,570.
- Income Tax: 20% × (£32,000 - £12,570) = £3,886.
- Class 4 NIC: 6% × (£32,000 - £12,570) = £1,166.
- Total tax due: £5,052.
- Refund: £8,000 deducted - £5,052 due = £2,948.
Allowable expenses for subcontractors
- Vehicle costs - business mileage at 45p/mile (first 10K) and 25p (after), or actual costs apportioned by business use percentage
- Tools and equipment - power tools, hand tools, ladders, scaffolding (via Annual Investment Allowance)
- Protective clothing - hi-vis, hard hats, safety boots, work-specific clothing
- Materials not separately invoiced through the contractor
- Phone - business proportion of bills
- Home office - £26/month flat rate or apportioned actual costs
- Subcontractor wages if you sub out portions of work
- Insurance - public liability, tools insurance, professional indemnity
- Training - CSCS card renewals, trade-specific certifications, ongoing skill maintenance
- Accountant fees
Common mistakes
- Not registering for CIS - 30% deduction instead of 20%, costing you £400 per £4K of labour income
- Mixing personal and business expenses - keep separate bank accounts and clean records
- Losing payment and deduction statements - HMRC needs evidence of every CIS deduction claimed
- Filing Self Assessment late - £100 immediate penalty, then daily penalties and interest
- Missing the materials/labour split - if you're not separating, you're paying CIS on materials too (unnecessary)
- Not claiming home office or phone - small but they add up
Frequently asked questions
When do I file my Self Assessment?+
By 31 January following the tax year. So 2024/25 tax year (ending 5 April 2025) is filed by 31 January 2026. Filing earlier means earlier refunds - HMRC usually processes refunds within 2-6 weeks of filing.
Can I claim my van?+
Yes - either via mileage at 45p/25p, or actual costs (purchase via AIA, fuel, insurance, repairs) apportioned by business use percentage. A specialist accountant compares both methods and uses the better one for you.
What if my contractor hasn't paid me CIS deductions to HMRC?+
Your refund claim is still valid - the obligation is on the contractor, not you. You need the payment and deduction statement to evidence the deductions. If the contractor hasn't issued one, request it formally; HMRC can investigate the contractor if they fail to pay deductions over.
Tell us about your situation. We'll match you with the right specialist.
No fees, no obligation. We come back within 1 working day.