How to Claim Your CIS Refund for 2025 from HMRC

Introduction

If you're a construction industry subcontractor working under the Construction Industry Scheme (CIS), you might be entitled to a significant tax refund. Under the CIS system, contractors deduct tax from your payments at a rate of 20% (or 30% if you're unregistered), which often results in overpayment of tax. This blog will guide you through the process of claiming your CIS tax refund for the 2024/2025 tax year with the help of experienced accountants like MSA Accountants.

Why You Might Be Due a CIS Refund

Contractors withhold tax from your payments at a flat rate that doesn't account for:

• Your tax-free personal allowance
• Business expenses you can claim
• Other deductions you may be entitled to

This means many subcontractors end up overpaying tax throughout the year and deserve a refund.

When to Claim Your 2025 CIS Refund

The 2024/2025 tax year runs from 6 April 2024 to 5 April 2025. You can claim your CIS refund as soon as the tax year ends, with claims being processed from April 2025 onwards.

The Process: Claiming Your CIS Refund with Professional Help

Step 1: Contact an Experienced Accountant

Reach out to specialized accountants who have extensive experience working with Construction Industry Scheme subcontractors. They understand the nuances of the construction industry and can maximize your refund while ensuring full compliance.

Step 2: Prepare Your Documentation

Your accountant will need the following records:

1. CIS Statements/Payslips: Collect all your CIS statements or payslips showing the deductions made throughout the tax year. These are crucial as they document exactly how much tax was deducted.
2. Unique Taxpayer Reference (UTR): Your 10-digit UTR number which identifies you with HMRC.
3. Business Expenses Records: Gather receipts and evidence for all allowable business expenses, including:
   • Tools and equipment purchases
   • Vehicle expenses (fuel, insurance, repairs)
   • Travel and accommodation costs
   • Work clothing and protective equipment
   • Mobile phone bills (business portion)
   • Training courses related to your trade
   • Insurance payments
   • Accountancy fees

   Learn more about claiming expenses as a CIS subcontractor.

4. Bank Statements: Covering the entire tax year, showing income and business-related expenditure.
5. Personal Information: National Insurance number, address history for the tax year, and contact details.
6. Previous Tax Returns: If you've submitted them before, these provide helpful context.
7. Details of Any Other Income: Including rental income, other employment, savings interest, etc.

Step 3: The Accountant's Process

Your accountant will:

1. Review Your Documentation: Thoroughly check all your CIS statements and payment records to confirm the total tax deducted.
2. Calculate Your Taxable Income: Determine your total income for the tax year.
3. Identify All Allowable Expenses: Analyze your expenses to identify everything that qualifies as a business deduction.
4. Apply Personal Allowances: Ensure your tax-free personal allowance (£12,570 for 2024/2025 unless changed in future budgets) is applied correctly.
5. Complete Your Self-Assessment Tax Return: Accurately fill in your tax return with all income and expense details. If you're new to CIS, you might need to register for CIS first.
6. Calculate Your Actual Tax Liability: Determine how much tax you should have paid based on your profits and allowances.
7. Determine Your Refund Amount: Calculate the difference between tax deducted and actual tax liability.
8. Submit Your Tax Return: File your completed Self-Assessment tax return to HMRC electronically.

Step 4: HMRC Processing

After submission:

1. HMRC Review: HMRC typically processes straightforward CIS refund claims within 3-6 weeks, though complex cases may take longer.
2. Verification Checks: HMRC may conduct verification checks, particularly for larger refund amounts or if there are any unusual patterns in your claim.
3. Payment Processing: Once approved, HMRC will process your refund payment. Most refunds are paid directly to your bank account.

Step 5: Receiving Your Refund

When your claim is approved:

1. Refund Payment: HMRC typically pays refunds via direct bank transfer, though some may still be issued by check.
2. Communication: Your accountant will monitor the process and keep you updated on the status of your refund.
3. Follow-up: If there are any delays or queries from HMRC, your accountant will handle these on your behalf.

How Much Could You Receive?

The amount of your CIS refund depends on several factors:

• Total income for the tax year
• Amount of CIS tax deducted
• Business expenses claimed
• Personal circumstances and other income

Many subcontractors receive refunds of £2,000-£5,000 or more, particularly those who have significant legitimate business expenses or who work for only part of the tax year.

The Value of Professional Help

While it's possible to claim a CIS refund yourself, using experienced accountants like MSA Accountants offers several advantages:

1. Maximized Refunds: Professional accountants know exactly which expenses you can claim and how to present them correctly.
2. Reduced Stress: They handle all communication with HMRC and manage any queries or complications.
3. Faster Processing: Properly prepared returns with all the correct documentation tend to be processed more quickly.
4. Audit Protection: If HMRC decides to investigate your claim, your accountant will handle the inquiry and defend your position.
5. Long-term Tax Planning: Beyond the refund itself, accountants can advise on strategies to improve your tax efficiency in future years.

Cost vs. Benefit

Most accounting firms specializing in CIS refunds, including MSA Accountants, work on a success fee basis or charge a fixed fee that represents only a small percentage of your typical refund. The professional guidance ensures you claim everything you're entitled to, often resulting in a substantially larger refund than you might achieve on your own.

Conclusion

Claiming your CIS tax refund for 2025 is a straightforward process when handled by experienced professionals. By gathering the right documentation and working with specialized accountants, you can ensure you receive every penny you're owed without the stress of dealing with HMRC directly.

Don't leave your hard-earned money with HMRC unnecessarily. As soon as the 2024/2025 tax year ends, contact a reputable accountant to start your CIS refund claim and get back what's rightfully yours. For more information about construction industry services, visit our dedicated builders page.