Reviewed by Connor Masters ATT, Senior Tax Specialist

Brick by brick, construction workers change our landscape, building everything from new homes to skyscrapers. But relatively few construction workers understand how CIS taxes are taken from their hard-earned pay. This tax scheme, covered in confusing paperwork and contractor middlemen, bleeds the bank accounts of builders and contractors alike. But what if you could get some of that money back, adding thousands back into your pocket each year? 

This guide will take you through the basics of CIS tax returns, empowering you to reclaim what’s rightfully owed. We’ll decode the jargon into plain English so you can cut through the smoke and mirrors. Whether you're a site manager, independent contractor or subcontractor, it’s time to learn what CIS takes - and how to legally get it back.

What is a CIS return?

A CIS return, or Construction Industry Scheme return, is a monthly report filed with HMRC that contractors submit to show how many subcontractors they’ve paid and how much. This should detail all earnings and expenses from construction work undertaken under the CIS scheme within the past tax month. 

For subcontractors, this scheme essentially acts as a pay-as-you-earn system for the construction industry, where contractors deduct 20% (or 30% if you’re unregistered) from your payments upfront and send it directly to HMRC. Subcontractors must submit a Self Assessment tax return at the end of each tax year to reconcile these deductions with actual tax liability, and that can potentially lead to a tax refund if you've overpaid. It’s the contractor’s responsibility to check if the subcontractors they use are verified with HMRC and to make any necessary CIS payments.

Who needs to file a CIS return?

  • Contractors: While your contractor handles the initial CIS deductions, they also need to submit monthly returns.
  • Self-employed construction workers: If you’re a subcontractor and you receive payments under the CIS scheme, you're legally obligated to complete self-assessment tax returns. However, if you don’t register for the Construction Industry Scheme, you’ll be taxed at the higher 30% rate.

What benefits are there to filing a CIS return?

Filing a CIS return can seem time-consuming and unrewarding, yet the pros far outweigh the cons. Here are just a few reasons to keep on top of your income and expenses, and submit your CIS return to HMRC:

  • Claim back overpaid tax: As we mentioned before, the 20% deduction may exceed your actual tax liability. If that’s the case, you could be due a considerable tax refund
  • Avoid penalties: Failing to file your CIS return can lead to hefty fines.
  • Maintain financial clarity: Filing keeps track of your earnings and expenses, essential for budgeting and planning for future tax years.

When you complete a CIS return, it’s a golden opportunity to reclaim any overpaid tax and ensure your HMRC records are accurate. Don't let the complexity of the scheme put you off – with the right support, you can navigate the process and could even receive a significant tax refund.

Remember, RIFT Refunds is here to help! With our expertise, we can simplify the filing process, maximise your deductions, and chase the refund you’re owed on your behalf.

What is the CIS return process?

If you're part of the Construction Industry Scheme (CIS), filing a self-assessment tax return is a regular part of your financial routine. For those working under CIS, whether as contractors or subcontractors, the process involves completing your tax return at the end of the tax year. Subcontractors employed through CIS have a shared deadline of 31st January for submitting their tax returns, in line with self-employed tax return deadlines.

Contractors, responsible for paying subcontractors, face a monthly obligation to file returns with HMRC by the 19th of each month following the last tax month. This monthly process keeps you compliant with the CIS scheme and ensures accurate reporting of payments made to subcontractors.

CIS tax returns are a common part of the construction industry. It's crucial to avoid mistakes during online filing to prevent paying more tax than you should. If you ever find yourself navigating through the complexities of the process, finding help is key. Many find guidance from experts useful in understanding the details. Additionally, using tools like RIFT’s tax return calculator can offer valuable insights into potential refunds. Because let's face it, we all could use a bit of clarity when it comes to tax returns.

When you're paid through CIS, your contractor withholds a portion of your pay and sends it directly to HMRC. While this process removes much of the responsibility from subcontractors, the system acts as an ‘advance payment’ toward your eventual tax and National Insurance responsibilities. The bright side is that you can reclaim the excess tax through your Self Assessment tax return.

Understanding allowable expenses is key to maximising your refund. Construction workers can claim for multiple costs, including work travel, essential tools, materials, business-related expenses, and accountancy fees. This knowledge is essential for making the tax return process work for you.

Switching to RIFT Refunds for your tax needs is seamless, even if you already have an accountant. RIFT's industry expertise means we’re familiar with CIS return and can maximise your rebate. If you’re after a hassle-free and expert-guided approach to tax matters within the construction industry, get in touch.

Why is complying with CIS returns important?

Meeting CIS return requirements isn’t just box-ticking. It's a crucial part of staying on the right side of the taxman and ensuring smooth financial reporting.

Failing to meet CIS return requirements can lead to more than just raised eyebrows from HMRC. There are real consequences, and they often come with a hefty price tag. Late or incorrect filings may result in financial penalties, and these can quickly add up. Worse still, non-compliance can open the door to legal issues, which is the last thing anyone in construction needs. Not submitting CIS returns isn’t ‘playing hardball’. It actually puts your business and finances at risk.

Timely submissions mean steering clear of those pesky fines. Keeping your finances in order ensures you're not needlessly parting with your hard-earned cash. By dotting the I's and crossing the T's on your CIS returns, you're also building a solid legal foundation. Legal disputes are a headache no construction worker or contractor wants to deal with, and timely submissions help keep those troubles at bay.

So, in the world of construction and CIS returns, compliance isn't just about following the rules - it's a strategic move to protect your business and keep your finances ticking over smoothly.

Expert insights from RIFT

Filing CIS returns isn’t anyone's idea of a good time, but handling them right keeps HMRC auditors off your back. Here's a quick checklist to make sure you’re always on top of CIS:

Get organised early: Whether it’s handwritten in a notebook or documented on a fancy spreadsheet, track subcontractor payments and related taxes as they occur. Document names, verification numbers, hours, gross pay, materials costs, deductions - everything in real time. Clean, accurate records make last-minute filing much easier.

Don’t be late: HMRC charges steep fines for missing submission deadlines. Mark the 19th of each month in your calendar with alerts leading up to it. Being organised beats last minute scrambles.

Check your maths: Before hitting submit, double check all the numbers on your return. Make sure subcontractor names, pay info, materials costs and deductions square up. Small mixups can cause audits.

Call in a pro: Tax specialists like RIFT can handle CIS scheme intricacies so you can focus on the job. We aim to make CIS returns easier, seeking to reclaim maximum funds while resolving any issues with HMRC quickly, before they snowball. Senior Tax Specialist at RIFT Refunds, Connor Masters ATT says:

Unlike accountants who charge per hour, our single is for an all-in-one service which includes switching from your previous accountant, avoiding penalties due to late return and yearlong aftercare and advice whenever you need it.

Go digital: Cloud accounting software can automate tedious tasks and streamline messy paperwork. Accounting software can handle estimates, schedules, invoices, payments, deductions, monthly reports, and tax filings all in one place. Less manual work means fewer human errors. Plus, cloud access lets you or your accountant log in from any device or location to stay on top of details. This is great for general contractors managing multiple sites or busy subcontractors that are always on the go.

When you stay diligent, CIS reporting doesn't need to be a headache. Lean on specialist expertise so you never pay more than you owe.

If you are due a CIS tax refund, acting quickly secures your payout faster. Verify your eligibility through RIFT’s user-friendly Tax Return Calculator. In a matter of moments, you can see if you have hundreds or thousands coming back. Don’t risk future fines or audits either - getting compliant protects your interests.

For personalised guidance from registration through filing, RIFT specialists make CIS simple. We maximise your deduction accuracy while resolving any issues with HMRC directly on your behalf. Recover every pound possible from self-employment, employment or CIS work while avoiding penalties.

Don’t tackle confusing CIS returns alone and miss out. Contact RIFT to claim your full tax refund with complete peace of mind. Our all-inclusive service handles everything from calculations to submissions and beyond. Partnering with us means more money back to you.