What Can I Claim on My CIS Tax Return?

Knowing precisely what expenses you can claim on your CIS tax return can mean the difference between a modest refund and recovering thousands of pounds you’re legitimately owed.

As a construction professional working under CIS, you’re entitled to claim various business-related expenses that directly support your work.

These range from essential tools and safety equipment to travel between job sites and professional development costs.

HMRC has specific regulations for self-employed CIS subcontractors.

Following these guidelines helps to secure the largest legitimate CIS tax refund that is also compliant with HMRC’s rules.

Whether you’re dealing with dual-purpose expenses? Not sure about the costs of materials? Confused about documentation requirements? Getting these claims right not only maximises your refund but also ensures you remain compliant with HMRC’s regulations.

This guide will walk you through what you can and cannot claim, helping you navigate the complexities of CIS tax returns while avoiding costly mistakes that could trigger HMRC penalties.

What are allowable expenses for my CIS tax return?

As a construction worker under CIS if you pay for something that you only use for work, then you are usually entitled to reclaim tax relief on that item.

We have listed below common allowable CIS sub contractor expenses:

• Staff – employers’ NICs, subcontracted labour, employee/staff benefits, employees’ wages/salaries, pensions, employment agency fees.
• Professionals’ fees including: architects, accountants, solicitors, surveyors.
• Travel, accommodation and food when away from home, tickets for any mode of transport (plane, bus, taxi, train). Car/van costs, including: parking, fuel, roadside assistance membership, repairs, insurance, servicing, vehicle licence.
• Office/admin including stationery, postage, office necessaries, computer software, printing, phone, internet, mobile, fax.
• Professional subscriptions to Trade Union membership, professional bodies or journals in your field.
• Financial – Insurance policy (directly for business), bank/business loan interest payments, charges for credit card, bank and overdraft, lease payments and hire purchase interest, other finance payments.
• Debts written off that is included in turnover and won’t be recovered.
• Utilities costs for power, rates, rent, insurance, security. This includes working from home, where there is a specific work area and you can measure how much and for how long something is used for business purposes.
• Goods and raw materials, production costs, for resale.
• Advertising online, free samples, mail, newspaper/directory ads.
• Construction Industry subcontractors payments, without deducting tax.
• Maintenance repairs to business premises, equipment, small consumables (some equipment, tools).

If you are unsure if an expense is allowable it is always best to check before submitting your tax return to avoid penalties.

HMRC can ask for a refund of tax to be repaid if they find at a later date you have claimed for expenses that are not allowable.

Are there items I should not put on my CIS tax return?

This bit is important because you should only include allowable expenses on your CIS tax return and HMRC can check.

You can only claim for items that are wholly and exclusively a business expense. You cannot claim for items that are for personal usage, or for higher ticket items that are classed by HMRC as capital.

HMRC makes tax relief available for an asset purchased for your business through the process of claiming capital allowances.

If you buy a piece of machinery for example you can make a claim for capital allowances which must be done separately within your self assessment tax return.

Items that are NOT allowable can include:

• Rent or mortgage payments for your own home.
• Everyday food and beverages (unless having to work away from home at a temporary workplace).
• Staff – Your own salary/other payments, NICs or pension, any payments made for work done outside the business.
• Legal fees for sorting out fines issued for illegal behaviour/activities or tax disagreements. Legal element of purchasing large equipment or property.
• Travel for any personal travel, commuting from home to one workplace journeys, initial purchase of vehicles.
• Office/admin for new hardware purchasing (Computer, phone, etc.), percentage of private use.
• Professional subscriptions – money given to political parties, charities or clubs.
• Financial – actual loan/overdraft/other financing repayments, any recoverable costs linked to insurance claim situations.
• Bad debts not included in turnover, any debt connected to a fixed asset.
• Initial purchasing of business premises, the proportion of utilities that can be attributed to personal usage.
• Business entertainment like event hospitality, entertaining suppliers/customers/clients.
• Goods and equipment depreciation, anything bought for private use.
• Asset depreciation of equipment, losses on asset sales.
• Maintenance for extending/changing buildings, repair of anything non-business related.
• Ordinary clothing even if there is a dress code, but no uniform.

The tax office can check your tax return. If they find that you have included expenses that are not allowable you will probably need to pay HMRC some of your CIS tax refund back and incur penalties.

What does dual purpose mean for my CIS tax return?

Dual purpose means that you use the item for business and personal use. In this case, you can claim the corresponding proportion of the allowed business expense.

An example would be using your own van for work to travel to temporary sites and also using the van for personal use at the weekend.

The personal mileage incurred in your van at the weekend should not be included in your total mileage claim figure on your tax return.

If your CIS tax return is investigated by HMRC they will require evidence to show the breakdown between personal and business use to make sure only business use has been claimed.

Making a mistake on your CIS tax return can land you with a fine from HMRC, so only make an informed decision before submitting your return.

What evidence do I need to support my CIS tax return?

The different work expenses have different requirements regarding supporting evidence.

Generally, it is only the type of documentation that you maintain as a matter of course during your working day.

If you’re not already keeping digital records both expenses and income is recommended.

Making tax digital will affect most CIS sub contractors which means keeping your records in a digital format is necessary. Outside of MTD you can keep paper or electronic records.

Records should be backed up and retained for a minimum of 6 tax years.

HMRC accept:

• Invoices for sales.
• CIS statements of earnings.
• Mileage log books.
• Cash books.
• Bank statements.
• Purchase receipts.

Using an app to download your receipts and invoices can be a cheap and efficient way to store your records.

Do I need to keep every single receipt for my CIS expenses?

While you should aim to keep comprehensive records, HMRC understands that some receipts may be lost or damaged.

The key is maintaining reasonable evidence of your business expenses through a combination of receipts, bank statements, and detailed records.

For vehicle costs, a mileage log is essential. For tools and equipment, receipts or bank statements showing the purchases work well.

If you’ve lost some receipts, bank statements can often provide sufficient evidence, especially when combined with a clear business purpose.

CIS tax return and other income

It is possible that you may have other income from another source other than from your self employed sub contracting work.

Your CIS tax return is not just for income from sub contracting and any other income has to be included on your tax return at the same time.

Common other forms of income include:

• PAYE income as an employee.
• Rental income if you are landlord.
• Bank or building society interest.
• Investment income.
• Taxable benefits.

Calculating my CIS tax rebate

You are only taxed on your profits; which are calculated using the equation:

Income – Expenses = Profits.

The more legitimate expenses you claim, the smaller your tax bill will be.

When you have completed your tax return it is important to review your tax calculation before submitting your return to make sure that you have included all of your income and expenses.

Our CIS tax refund calculator can help you work out an estimate based on your gross income and expenses.

What happens if HMRC asks to see my CIS refund documentation?

HMRC may request to review your supporting documentation during their compliance checks, which can happen randomly or if something appears unusual in your return.

When this occurs, you’ll need to provide the original documents or clear copies within a specified timeframe, usually 30 days.

This is why maintaining organised, accessible records is so important.

Having everything properly filed and easily retrievable demonstrates professionalism and can help resolve any queries quickly, ensuring your refund isn’t delayed.