If you're a freelancer working in construction, dealing with your CIS tax return probably feels like one more admin task on an already packed to-do list.
But here's the good news – getting your CIS self assessment tax return right isn't as tricky as it seems, and you could even end up with a nice refund at the end of it all.
Let's start with the basics. CIS stands for Construction Industry Scheme, and it's basically HMRC's way of collecting tax from construction workers before they get paid. When you work as a self-employed construction worker, your contractor takes money from your pay and sends it straight to HMRC – usually 20% if you're registered, or a painful 30% if you're not.
Now, here's where it gets interesting. Just because tax has been deducted doesn't mean you're done with HMRC. You still need to file a self assessment tax return every year to work out if you've paid too much or too little tax. Think of those CIS deductions as an advance payment – like putting down a deposit on your annual tax bill.
For the 2025/2026 tax year, which runs from 6 April 2025 to 5 April 2026, the rules remain pretty much the same as before. You'll need to report all your income, claim your expenses, and then HMRC will work out if they owe you money or if you owe them. More often than not, subcontractors end up getting money back because those CIS deductions can be quite generous compared to what you actually owe.
Right, so who actually needs to worry about filing a CIS tax return? If you're a freelancer working in construction – whether you're laying bricks, fitting kitchens, or doing electrical work – you're in. It doesn't matter if you're working for one contractor or twenty; if you're getting CIS deductions taken from your pay, you need to file.
The difference between subcontractors and contractors is pretty straightforward. Contractors are the ones doing the deducting – they're usually bigger companies or main contractors who hire you to do work. Subcontractors are the ones getting deducted from – that's probably you if you're reading this.
There's also this thing about gross payment status versus standard rate. Most subcontractors are on the standard 20% rate, which means contractors automatically take 20% from your pay. But if you've been trading for a while and meet certain criteria, you might qualify for gross payment status. This means you get paid in full with no deductions – sounds great, right? Well, you still owe the same tax; you just pay it all in one go through self assessment instead of having it taken bit by bit.
Missing deadlines is like showing up to a job site after everyone's gone home – it's going to cost you. The tax year runs from 6 April to 5 April the following year, and you've got until 31 January to file online. If you're old school and prefer paper returns, you need to get them in by 31 October.
Miss that 31 January deadline? That'll be £100 straight away, even if you don't owe any tax. Leave it three months and you're looking at daily penalties on top. The really annoying part is that many subcontractors are actually due refunds, so paying penalties when HMRC owes you money is just throwing cash away.
Getting your CIS self assessment tax return sorted doesn't have to be a headache. Here's your checklist:
This bit's important because putting numbers in the wrong boxes is like fitting the wrong size pipe – it's going to cause problems later. On your self assessment form, you'll be using the SA103 form for self-employment income.
If you're using the full SA103F form, your CIS deductions go in Box 81. Pretty straightforward – just copy the total from all your CIS statements. If you're using the short version of the form, it's Box 38 instead. Same number, different box. Just make sure you're consistent and don't accidentally put the same deductions in twice.
Here's where it gets satisfying. All those deductions that have been taken from your pay throughout the year get knocked off your final tax bill. Say you owe £5,000 in tax but you've had £7,000 deducted through CIS – congratulations, you're getting £2,000 back.
The calculation works like this: HMRC takes your total income, subtracts your personal allowance and expenses, works out the tax on what's left, then takes away your CIS deductions. If the deductions are more than the tax, you get a refund. If they're less, you'll need to pay the difference.
This is where you can really make a difference to your tax bill. Every legitimate business expense reduces your taxable profit, which means less tax to pay (or a bigger refund). Here are the big ones:
• Tools and equipment – everything from hammers to power tools • Van or truck expenses – fuel, insurance, MOT, repairs • Work clothing and safety gear – steel-toed boots, hard hats, hi-vis jackets • Mobile phone bills for business calls • Accountancy fees (yes, paying Virtue Accountants is tax-deductible!) • Trade insurance and professional indemnity • Training courses to improve your skills • Materials you buy for jobs (if not reimbursed) • Home office costs if you do paperwork at home • Bank charges on your business account
Let's walk through how this actually works with real numbers. You start with your gross income – let's say £40,000 for the year. Then you take away your allowable expenses – maybe £8,000 for van costs, tools, and other bits. That leaves you with £32,000 taxable profit.
After your personal allowance (£12,570 for 2024/25), you're taxed on £19,430. At 20% basic rate, that's £3,886 in tax, plus maybe £2,000 in National Insurance. So your total tax bill is around £5,886. But if you've had £8,000 deducted through CIS, you're looking at a refund of over £2,000. Not bad for a bit of paperwork!
Even experienced construction freelancers make these mistakes, so watch out for them:
Want to squeeze every penny from your refund? Start by keeping brilliant records. Every receipt, every invoice, every mile you drive for work – document it all. Use a simple spreadsheet or one of those receipt-scanning apps on your phone.
File early if you're expecting a refund. Why let HMRC hold onto your money longer than necessary? Filing in April or May means you could have your refund by June, rather than waiting until February if you file at the last minute.
Consider using accounting software that's designed for construction workers. These programs know about CIS and can automatically calculate your deductions and help track expenses. Some even link directly to HMRC for easy filing.
Technology's your friend here. Free CIS tax calculators online can give you a rough idea of your refund before you file. Apps like Receipt Bank or Dext let you photograph receipts and forget about shoeboxes full of paper.
For software, FreeAgent and Xero both handle CIS well, though they'll cost you around £10-30 per month. QuickBooks is another solid option. If you're tech-savvy, these can save hours of admin time. If computers aren't your thing, that's where accountants come in handy.
Let's look at a real-world CIS tax return example. Meet Dave, a self-employed electrician. His CIS self assessment tax return example for 2024/25 looks like this:
Dave earned £45,000 gross from various contractors. They deducted £9,000 in CIS tax (20%). His expenses included £3,500 for his van, £1,200 for tools, £800 for insurance, £600 for phone and internet, and £400 for work clothes. That's £6,500 in total expenses.
His taxable profit is £38,500 (£45,000 minus £6,500). After his personal allowance, he's taxed on £25,930. His tax bill comes to about £5,186 for income tax, plus £3,549 for National Insurance – total £8,735. But he's already paid £9,000 through CIS, so Dave gets a £265 refund. Not massive, but better than owing money!
This is where Virtue Accountants really shines; we know CIS inside out and can handle your entire CIS tax return from start to finish.
Our team understands the industry and knows exactly which expenses you can claim.
With premium accounting services for freelancers, we'll handle your bookkeeping, track your CIS deductions, and make sure you claim every expense you're entitled to.
Our Virtue+ package includes quarterly VAT returns and tax efficiency checks – perfect if you're turning over decent money.
The best part? We use cloud-based systems and have a mobile app, so you can snap photos of receipts on-site and forget about them. No more carrier bags full of crumpled papers or lost CIS statements. We'l, calculate your tax position throughout the year, and file everything on time.
Filing your CIS self assessment tax return doesn't have to be the nightmare many subcontractors fear. With the right approach, good record-keeping, and maybe some professional help, you can get through it painlessly and possibly walk away with a decent refund.
The key things to keep in mind? Register on time, keep every receipt, track all your CIS deductions, and don't leave it until the last minute. Whether you tackle it yourself with some good software or hand it over to experts like Virtue Accountants, the important thing is getting it done right.
Your CIS tax return example might look different from Dave's, but the principles stay the same. Report your gross income, claim your genuine business expenses, account for your CIS deductions, and file on time. Do that, and you'll stay on the right side of HMRC while keeping as much of your hard-earned money as possible.
Working in construction is tough enough without tax worries keeping you up at night. Get your CIS self assessment sorted properly, and you can focus on what you do best – getting the job done.
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