How to reclaim CIS deductions as a sole trader

As a sole-trader subcontractor, your CIS deductions are tax you've already paid. You don't reclaim them separately — you put them on your Self Assessment and they're offset against your total tax bill. If they exceed what you owe, HMRC issues a refund (or credits the next bill).

The key thing: you can't reclaim deductions you can't prove. So step one is keeping every Payment and Deduction Statement.

Your contractor is legally required to give you a Payment and Deduction Statement within 14 days of the end of the tax month. It shows:

• The gross amount they paid you
• The materials cost (exempt from CIS)
• The labour amount
• The deduction taken (20% or 30% of labour)
• The contractor's name, UTR, and the tax month

These are the only evidence HMRC accepts. Lose them and you lose the deduction. Take a photo of each on your phone the day you receive it.

The UK tax year runs 6 April to 5 April. At the end of it, add up the deductions from every PDS dated in that period. This is the figure that goes on your Self Assessment.

If you've been using Honest Invoices, this total is calculated for you automatically — every CIS-tagged invoice contributes to a running annual figure on the dashboard.

On the Self Assessment form, find the section titled "Tax deducted by a contractor under the Construction Industry Scheme" (it's in the self-employment supplementary pages). Enter the total deductions from step 2.

HMRC adds this to your total tax already paid. They calculate the tax you owe on your actual self-employment profits, subtract everything you've already paid (including CIS deductions), and either bill you the difference or refund you.

CIS is deducted on your gross labour income — before you subtract any expenses. But your actual tax bill is calculated on your profit — after expenses. So if you've had £8,000 of CIS deductions taken on £40,000 of labour, but you've spent £12,000 on van costs, materials, tools, phone, insurance, and accountant fees, your taxable profit is much lower than HMRC's deductions assumed.

That's why a refund is the norm, not the exception, for working sole traders.

For sole traders, refunds typically land 2–8 weeks after you submit a complete Self Assessment, assuming HMRC has no further questions. If your return triggers a check (often: large refund relative to turnover, first year of trading, lots of round-number expenses), it can take 12+ weeks. File early — refunds in May/June are processed faster than the January rush.

From April 2026, if you earn over £50,000, you also submit quarterly updates through MTD-compatible software. CIS deductions still flow through Self Assessment at year-end — they don't go on quarterly updates. But the quarterly updates are calculated from the same invoices, so keeping CIS-correct records throughout the year is now table stakes, not optional.

See our guide on what MTD ITSA actually requires of tradespeople.

Every invoice tagged as CIS work splits labour and materials, calculates the deduction at the right rate, and totals your year-to-date deductions on the dashboard. At year-end, your CIS reclaim figure is ready — no PDS hunt, no calculator, no scrambling.