The deductions a contractor takes under CIS are advance payments towards your tax, not an extra tax. You tell HMRC about them when you report your taxes, and the way you do it depends on how your business is set up. You will need the monthly payment and deduction statements your contractors gave you.
Sole traders and partners
- After the tax year ends, send your Self Assessment tax return as usual.
- Record your total pay before deductions as income.
- Record the total deductions contractors took as 'CIS deductions'.
HMRC works out what you owe and takes off the CIS deductions. If you still owe tax, pay it by 31 January after the end of the tax year (31 January 2028 for 2026/27). If you are due a refund, HMRC pays it back. Estimate yours with the CIS rebate calculator.
If you stop trading, you may be able to get a refund of deductions already paid in the current tax year using HMRC's sole trader or partner claim form.
Limited companies
- Send your Full Payment Submission (FPS) as usual.
- At the same time, send an Employer Payment Summary (EPS) with the total CIS deductions for the year to date.
- HMRC takes the CIS deductions off what you owe; pay the balance by the usual date.
Deductions left over can be carried forward within the same tax year. Anything left after the tax year ends can be claimed as a refund. GOV.UK warns not to use the Corporation Tax return to pay tax with CIS deductions, as you may get a penalty.
Keep your statements
Contractors must give you a payment and deduction statement within 14 days of the end of each tax month. Keep them all; HMRC may ask for evidence. If one is missing, ask the contractor for it.
Sources: GOV.UK — pay tax and claim back deductions · GOV.UK — get paid.
Estimates only, not tax advice.