CIS deductions explained in plain English
If a contractor takes a chunk off your pay before you see it, that's CIS. Here's what the deduction is, why it happens, and why most subcontractors get some of it back.
In short: CIS subcontractors can claim costs incurred wholly for the work — tools and equipment, materials, van and mileage costs, public liability insurance, protective clothing, and a fair share of phone and admin. The test is simple: did you have to spend it to do the job? Personal spending and the personal portion of mixed-use costs don't count.
Expenses are the part of CIS that actually puts money back in your pocket. Because the CIS deduction is taken from your gross labour before any costs are considered, the expenses you claim directly reduce your taxable profit — and that’s what determines your real tax bill and, usually, your refund. Under-claim and you leave money with HMRC; over-claim and you risk a problem. So it’s worth getting right.
The one rule that decides everything
There’s a single test behind almost every expense question: was the cost incurred wholly and exclusively for the work? If yes, it’s generally allowable. If it’s personal, it isn’t. And if it’s a bit of both — like a phone you also use to ring your mum — you can only claim the business share.
That test is more useful than any list, because it lets you reason about costs you’re unsure of rather than hunting for them on a page.
The common claims
For most subcontractors, the regulars are:
- Tools and equipment bought for the job.
- Materials you paid for yourself.
- Van and travel costs — fuel, insurance, tax, repairs, or HMRC’s flat mileage rate if that’s simpler.
- Public liability insurance and any trade-specific cover.
- Protective clothing and safety gear — boots, hi-vis, gloves, hard hats.
- Phone and admin — the business share of your phone, plus things like accountancy fees.
Mixed-use costs
This is where people slip up. A phone used for work and home, a van used on weekends, a room at home used occasionally for paperwork — these are mixed use, and you can only claim the business proportion. Be reasonable and consistent. HMRC isn’t looking for perfection, but it does expect the split to make sense.
How it feeds your refund
Every pound of genuine expense reduces your taxable profit, which reduces the tax due, which increases the gap between what was deducted under CIS and what you actually owed. That gap is your refund. If you want to see the effect, put your earnings, expenses and CIS deducted into the CIS Tax Refund Calculator and watch the estimate move as you add costs.
If you’re still fuzzy on why the deduction happens in the first place, the plain-English explainer on CIS deductions covers it.
General information only, not tax advice. The rules on larger equipment and some costs have specific treatments — check HMRC’s expenses guidance or ask an accountant if you’re unsure.