How do subcontractors reclaim CIS deductions?
Answered 17 March 2026
Here is a comprehensive answer on how subcontractors reclaim CIS deductions, covering the three main categories of subcontractor:
How Subcontractors Reclaim CIS Deductions
The method of reclaiming depends on whether the subcontractor is an individual/sole trader, a partner in a partnership, or a limited company.
HMRC Guidance / Practice
1. Sole Traders and Individuals (Self Assessment)
Individuals who are subcontractors claim credit for CIS deductions through their Self Assessment (SA) tax return. Deductions are treated as Income Tax paid in respect of relevant profits. When a subcontractor claims credit on their SA return, an automated comparison is made between the deductions shown on the return and the payments recorded on the CIS system. Where amounts deducted exceed the Income Tax liability, the excess is used to discharge Class 4 NIC contributions due, and any further excess is repayable.
2. Partners in a Partnership
CIS deductions made from a partnership are claimed on the partnership Self Assessment return. Where the partner is an individual, they claim their share of the partnership CIS deductions on the partnership page of their own personal SA return, and credit is given in their income tax calculation for the year of deduction.
Where the partner is a company, the only mechanism for claiming their share of the partnership CIS deductions is to offset it against the PAYE/NICs they are due to pay to HMRC as an employer during the year of deduction, and to claim their share on the employers' annual return (form P35 for non-RTI years, or monthly Employer Payment Summary (EPS) returns for RTI years).
3. Limited Company Subcontractors
From 6 April 2002, limited companies that have deductions made from their income as subcontractors are able to set off these deductions against their monthly or quarterly PAYE/NIC and any CIS liabilities due from their own employees and/or subcontractors. The amount set off is returned by completing the CIS deductions suffered box on the annual return form P35 (or via EPS returns under RTI).
Where a company's own CIS deductions are greater than the payments due in a tax month, the excess can be set against any future PAYE, NIC or CIS bill in the same tax year. At the end of the tax year, any excess CIS deductions that cannot be set off against PAYE or CIS liability may be refunded or set off against other liabilities.
Importantly, CIS deductions cannot be reclaimed through Corporation Tax (CT). Claims for credit or repayment must not be included in the company tax return. Where, after dealing with a set off against employer liabilities, there is an overpayment on the employer/subcontractor record, a company can request that the overpayment be set against any CT outstanding — but this is handled via a reallocation by PT Operations staff at the Employers Office NICEO.
In-Year Repayment Claims
Where a subcontractor claims a repayment before the end of the tax year, HMRC may require evidence such as bank statements or invoices to confirm the CIS deductions claimed, particularly where the CIS system does not confirm the amounts.
Citation sources
If a subcontractor makes a mistake in a return other than the amount of CIS deductions they can make a claim to overpayment relief. If a subcontractor has determined their income for the year, deductions made under the Construction Industry Scheme are treated as Income Tax paid in respect of relevant profits (see CISR75010). Where amounts deducted exceed the Income Tax liability in a Self-Assessment or determination the excess is used to discharge Class 4 contributions due and any excess is repa
Advise the subcontractor that the details of the payment and deduction(s) are noted and that the deduction claimed should be entered on their Self-Assessment return for the deduction year (SA Cases), or on the PAYE return form P35 after the end of the year of deduction (for non RTI years), or Employer Payment summary (EPS) returns for RTI years (Company cases). Make an SA or EBS note of the payments made, cost of the materials (if any) and the CIS deduction(s), and the period they relate to and
From 6 April 2002, limited companies, that have deductions made from their income as subcontractors, are able to set-off these deductions against their monthly or quarterly PAYE / NIC and any CIS liabilities due from their employees and/or subcontractors. The amount set-off is returned by completing the CIS deductions suffered box on their annual return form P35. Further information is available in the CISR Manual at CISR76020. Note: From April 2013 a work list entry will not be created for empl
From 6 April 2002, limited companies, that have deductions made from their income as subcontractors, are able to set-off these deductions against their monthly or quarterly PAYE / NIC and any CIS liabilities due from their employees and / or subcontractors. The amount set-off is returned by completing the CIS deductions suffered box on their annual return form P35. At the end of the tax year, following receipt of the company's P35 return and where the company acts as a subcontractor, any excess
Companies that are subcontractors in the construction industry and do not hold gross payment status under the CIS rules are liable to suffer deductions under FA04/S61 from payments to them under contracts relating to construction operations. From 6 April 2002 relief cannot be claimed through Corporation Tax. For deductions suffered on or after 6 April 2002 CIS deductions are no longer ‘relevant payments’ and set against CT liabilities. CIS deductions can only be used to set against employer liab
When a subcontractor claims credit for CIS deductions on their self-assessment return, as part of the capture process of that return an automated comparison is made between the deductions shown on the self-assessment return, and the payments made to the subcontractor by all of their contractors during the year as shown by CIS. The results of this comparison will show in the ‘Payment details’ window in the CIS function ‘View Customer’ (See CISR90210). A detailed explanation of the way this compar
| CISR75600 | Action guide contents | |—————————————————————————————————–|———————–| CIS deductions made from an ‘ordinary’ or a ‘limited liability’ partnership are claimed on the partnership Self-Assessment return. Where the partner is an individual, they will claim their share of the partnership CIS deductions on the partnership page, completed as part of their own personal Self-Assessment return and credit for their share of the partnership CIS deductions will then be given in their income tax