Common allowable expenses
As a self employed subcontractor you are taxed on your profit, so the wholly and exclusively rule applies and you can claim the costs of doing the work. The list for construction trades is long, which is exactly why so many subcontractors are owed money.
Tools and equipment are a core cost, from hand tools to power tools, and small tools can usually be claimed in the year you buy them. Protective clothing and personal protective equipment count too, including hard hats, safety boots, gloves, hi vis and goggles, because these are genuine protective items rather than everyday clothing.
Materials you pay for and supply to a job are allowable. Travel to temporary sites is a major expense, so the mileage to and from sites you work at on a temporary basis can be claimed, either at 45p per business mile for the first 10,000 business miles and 25p after that, or as the business share of your actual vehicle costs. Public liability insurance, tool insurance, your phone, and accountancy fees are allowable as well. Together these costs can be substantial across a year on the tools.
Expenses people often miss
Many subcontractors underclaim simply because they do not keep receipts for the smaller things. Consumables like screws, fixings, sealant, blades and abrasives all add up. So do replacement hand tools bought through the year and the cost of maintaining or repairing your equipment.
Travel is the big one that gets missed or undervalued. If you move between different temporary sites, those miles are allowable, and over a year a tradesperson can cover thousands of business miles. Parking at sites, congestion charges incurred for work and the business share of your phone are all claimable.
Laundering protective clothing, public liability and tool insurance, and your accountancy fees are also easy to forget. Our guide to allowable expenses sets out more of these, and getting them all in is what increases your refund.
Risky or commonly challenged expenses
The area that causes the most trouble is travel that is really commuting. Ordinary travel from home to a single permanent workplace is not allowable, while travel to temporary sites generally is, so the nature of the site matters and a clear mileage log is important.
Everyday clothing is not allowable, even sturdy trousers or boots you only wear on site, unless they are genuine protective equipment or a branded uniform. Only the protective element counts. Claiming all your mileage without separating private journeys, or claiming tools that are actually for personal home use, will invite questions.
Client entertaining is never allowable, so taking a contractor for a meal to keep the work coming cannot be claimed. Fines, including penalties for site or motoring offences, are never allowable either.
Records to keep
The most important records for a CIS subcontractor are your monthly CIS deduction statements. Every contractor who pays you must give you a statement showing your gross pay, the cost of any materials and the tax deducted. Keep every one, because these are the proof of the tax already paid that you reclaim through your return.
Keep receipts and invoices for tools, PPE, materials, fuel and your phone, and keep a mileage log separating business journeys to temporary sites from private travel. Always split labour and materials on the invoices you raise, because this affects how much CIS is taken in the first place. Our bookkeeping service can keep these records in order through the year.
Keep all of this for at least 5 years after the 31 January Self Assessment deadline it relates to.
A worked example
The example below shows how the deduction and your expenses combine to produce a refund.
A subcontractor reclaiming overpaid CIS
Tom is a registered CIS subcontractor. During 2026/27 his contractors paid him £40,000 of labour and deducted 20%, which is £8,000, before paying him the balance. The deduction was worked out on his labour alone, ignoring both his £12,570 personal allowance and his costs. Tom had £7,000 of allowable expenses for tools, PPE, materials, mileage and insurance, so his taxable profit is £40,000 less £7,000, which is £33,000. After his personal allowance, the tax and Class 4 National Insurance due on that profit come to roughly £5,700 in this example. Because £8,000 was already taken under CIS, Tom is owed a refund of around £2,300 once his return is filed.
The figures will differ for everyone, but the principle is the same. The 20% deduction is a flat charge on labour that takes no account of your allowances or expenses, so once those are applied through Self Assessment, most subcontractors find they have paid too much and are due money back.
Common mistakes
The most costly mistake is not filing at all, or filing without claiming expenses, which leaves the refund unclaimed. Another is failing to split labour and materials on invoices, because CIS should only be deducted from labour, not from materials you supply, so combining them means too much tax is taken.
Other slip ups include losing CIS deduction statements, not keeping a mileage log, missing travel to temporary sites, and forgetting smaller costs like consumables, insurance and phone. Some subcontractors also assume the deduction settles their tax in full, when in fact it usually overpays and a return is needed to put it right.
Because the deduction ignores your personal allowance and your costs, almost every subcontractor should check whether a refund is due rather than assume HMRC will sort it automatically.
What you should do
Register for CIS so you are deducted at 20% rather than 30%, split labour and materials on every invoice, and keep your deduction statements along with receipts and a mileage log. File your Self Assessment return and claim every allowable cost so any overpaid tax comes back to you.
If you want this handled, see our guide on how to claim a CIS refund and our accountants for construction page. You can start your quote for a fixed fee and we will deal with the return and the refund for you.
CIS subcontractors usually get a tax refund because the 20% deduction ignores the personal allowance and every expense you are entitled to claim.
Frequently asked questions
Why do CIS subcontractors usually get a refund?
Because the deduction taken by your contractor, 20% if you are registered or 30% if not, is a flat charge on your labour. It ignores your £12,570 personal allowance and takes no account of your expenses. Once you file your return and apply your allowance and costs, the tax actually due is usually lower than the amount deducted, so the difference is refunded.
What can I claim as a CIS subcontractor?
You can claim tools and equipment, protective clothing and PPE, materials you pay for, travel to temporary sites and mileage, public liability and tool insurance, your phone and your accountancy fees. You claim the business proportion of any cost used partly for personal reasons.
Why must I split labour and materials on my invoices?
Because CIS is only deducted from your labour, not from materials you supply. If you do not separate them, the contractor may deduct tax from the whole invoice, including materials, which means too much tax is taken and you have more to reclaim later. Splitting them keeps the deduction correct from the start.
Is travel to site allowable?
Travel to temporary sites is generally allowable, either at 45p per business mile for the first 10,000 business miles and 25p after that, or as the business share of your actual vehicle costs. Ordinary commuting to a single permanent workplace is not allowable, so keep a mileage log to support your claim.
What records do I need to claim a refund?
You need your monthly CIS deduction statements, which show your pay, materials and tax deducted, plus receipts for tools, PPE, materials, fuel and phone, and a mileage log. Keep these for at least 5 years after the 31 January deadline they relate to.
How do I get my overpaid CIS back?
You reclaim it through your Self Assessment tax return. The return applies your personal allowance and expenses against your income, calculates the tax actually due, and sets the CIS already deducted against it, so any overpayment is refunded to you. See our guide on how to claim a CIS refund for the detail.