Executive Summary:
The Construction Industry Scheme lets contractors claim eligible expenses, such as materials, tools, clothing, travel, phone, insurance, and fees, that can lower taxable profit and boost refunds. Proper records, accurate claims, and correct CIS deductions ensure compliant tax returns and eligible costs aren’t missed.
The Construction Industry Scheme takes tax off your pay before it even reaches your bank account, and that flat deduction takes no notice of what you actually spent to earn it. Most subcontractors end up owed money back once their return is filed, and the size of that refund depends entirely on what gets claimed.
Your CIS allowable expenses cover materials, tools, travel, and insurance, and missing even a few categories means leaving cash with HMRC that should be yours. This guide sets out exactly what counts, how the 20% deduction fits alongside your expenses, and what records to keep so nothing slips through at tax time.
What Can Contractors Claim on Tax Under CIS?
Every expense you claim needs to be for your work and nothing else, so keeping business costs separate from personal spending makes the whole process far simpler.
Materials and Consumables
Bricks, cement, timber, plaster, screws, and adhesives all count as materials bought for a specific job. These already appear on your CIS payment and deduction statement in many cases, so check your records match what the contractor has listed before you claim them again.
Tools and Equipment
Drills, saws, hammers, and other hand tools bought for your trade are claimable in the year you buy them. Larger purchases over £1,000 may fall under capital allowances, so it helps to keep the receipt and purchase date for anything substantial.
Protective Clothing and Safety Gear
Steel-toe boots, hi-vis jackets, hard hats, gloves, and goggles are all necessary for site work and are considered allowable costs. Ordinary clothing does not qualify, even with a site dress code, since it could be worn outside of work too.
Vehicle and Travel Costs
Getting to a temporary site, somewhere you expect to work at for less than 24 months, is claimable through mileage or actual running costs. The standard mileage rate allows you to claim 45p per mile for the first 10,000 business miles and 25p per mile after that. However, journeys between your home and a permanent workplace are not eligible for this claim.
Phone and Internet Costs
A share of your phone and internet costs can be claimed if you use them for work purposes, such as contacting clients, ordering materials, or accessing site information. Only the business portion counts, so HMRC expects a rough but honest split between work and personal use.
Insurance and Professional Fees
Public liability insurance, tool cover, and accountancy fees for preparing your return all reduce your taxable profit. Personal insurance unrelated to your trade cannot be included, no matter how essential it feels to you personally.
CIS Allowable Expenses: Rates and Limits to Remember
Use the table below as a quick reference for important CIS rates, claim limits, and expense rules.
| Item | Rate or Limit |
| Mileage, first 10,000 miles | 45p per mile |
| Mileage, after 10,000 miles | 25p per mile |
| Capital allowance | Larger equipment purchases may need to be claimed as capital allowances |
| Temporary workplace rule | A site expected to last under 24 months qualifies for travel claims |
| Phone and internet | Only the business-use percentage of the bill is claimable |
| Registered CIS deduction rate | 20% of labour |
| Unregistered CIS deduction rate | 30% of labour |
| Record-keeping | Keep receipts, invoices, and payment and deduction statements for at least 5 years |
CIS Deductions Explained: How the 20% Works
Understanding the deduction itself helps explain why expenses matter so much to your final bill.
Registered Versus Unregistered Rates
Subcontractors registered with HMRC have 20% deducted from their labour, while unregistered ones face 30%. Registering as soon as you start working under CIS is worth doing early, since it makes a real difference to how much cash reaches you each month.
Your Payment and Deduction Statement
Contractors must give you a statement within 14 days of the end of each tax month, showing gross pay, materials, and the amount deducted. Keep these statements safely, since you will need them to prove which taxes have already been taken off your income.
How the Deduction Sets Against Your Bill
The amount withheld is treated as tax paid in advance and is credited against your Income Tax and National Insurance once your return is processed. It is not your final tax bill; it is just money HMRC holds until your actual liability is determined.
Materials on Your Statement
Materials listed on your CIS statement are separate from the wider business expenses you claim on your tax return. Both reduce what you owe, but only one appears on the contractor’s paperwork, so keeping the two apart avoids double counting.
Getting Your Refund
Because the 20% deduction does not consider your Personal Allowance or the costs you cover while working, many subcontractors end up due a refund after completing their self-assessment. Keeping track of your deductions and expenses throughout the year makes it easier to work out what you have actually overpaid and claim the correct amount back.
Why Construction Industry Scheme (CIS) Expenses Matter for Your Refund
Accurate records help you claim eligible costs, reduce your taxable profit, and avoid missing expenses that could affect your refund.
- Allowable business costs can reduce your taxable profit and lower your tax bill.
- Small expenses, including phone use and protective gear, can make a difference when claimed correctly.
- Well-organised receipts and records make the tax process simpler.
- Careful tracking throughout the year helps prevent missed claims and unnecessary payments.
The right approach to expense tracking saves time and ensures you are not leaving money behind at year-end. As one of the most trusted accountants for the construction industry, Everest Accountants Ltd helps contractors claim every expense they are entitled to, keeping their CIS returns accurate and their records audit-ready. Get in touch today to speak with a specialist.
Frequently Asked Questions
Can I claim expenses even if tax was already deducted?
Yes, the CIS deduction and your business expenses are two separate things. Expenses reduce your taxable profit on your self-assessment return, while the CIS deduction is simply tax already paid in advance.
Do I need receipts for every expense?
Keeping receipts and invoices for everything you claim protects you if HMRC ever checks your return. Without proof, a claim can be disallowed, so it pays to save documents as you go and not leave the search until later.
Can I claim to travel from home to my usual workplace?
No, travel to a permanent base does not qualify as an allowable expense. Only journeys to a temporary site, one you expect to work at for less than two years, can be claimed through mileage or running costs.
Do these costs directly reduce my CIS deduction?
Not directly, since the deduction is calculated on your labour before expenses are considered; expenses reduce your taxable profit at the end of the year, which increases the refund you receive.
What happens if I forget to claim something?
You can amend a self-assessment return within twelve months of the filing deadline if you spot a missed expense. Maintaining accurate records throughout the year reduces the chances of needing to make corrections later.
Conclusion
Construction Industry Scheme (CIS) expenses play an important role in reducing your taxable profit and helping you claim the costs you are entitled to. Materials, tools, protective gear, travel, phone costs, and insurance can all contribute to lowering what you owe under the Construction Industry Scheme. Keeping these separate from materials already listed on your CIS statement avoids confusion when your return is due. A little organisation throughout the year makes the process smoother and helps ensure your refund is as accurate as possible, without a last-minute rush every January.
Getting every category right takes genuine know-how, and that is exactly where Everest Accountants Ltd makes a real difference. We provide dependable accounting services in London, UK, built around contractors and subcontractors, working to ensure your CIS return reflects every penny you are entitled to claim. Contact Everest Accountants Ltd today to get started!