CIS deductions: what expenses can you claim?

If you’re a self-employed individual under the CIS (Construction Industry Scheme), luckily for you, there are a few CIS deductions you can use to maximise your rebate.

First of all, let’s explain what CIS actually is. If you’re a self-employed contractor in the construction industry, you must register for CIS – a HMRC scheme that determines how workers in the construction industry pay tax. If you’re carrying out work for a contractor, you’re a subcontractor – you have the option to choose whether to register under the CIS. 

CIS work includes most construction work such as:

• Building work
• Repairs and decorating
• Civil engineering work
• Demolition and dismantling
• Installing systems for ventilation, heating etc

Contractors must withhold tax when paying subcontractors in line with the CIS rules and tax rates:

• 20% is deducted if the subcontractor is registered under the CIS
• 30% is deducted if the subcontractor is not registered under the CIS

This will then count towards income tax and national insurance contributions. Subcontractors can also apply to receive their payments gross.

Now, on to expenses:

Car and van expenses

If you use a car or van for your work, you can claim transport in two ways.

Do you use your car for work 75% of the time?

• You can claim 75% of leasing payments, fuel, car insurance, road tax, etc. 
• People who use this method often purchase the vehicle for work purposes only

Or you can use HMRC’s simplified expense rate. It’s an allowance called the Mileage Allowance and you can claim a flat rate of 45p per mile to cover petrol. If you already owned your vehicle and now use it often for work, then this method is probably a better fit!

Unfortunately, you can’t expense the cost of an entire vehicle – the Mileage Allowance is as good as it gets.

If you’re claiming the Mileage Allowance, we’ve got a handy calculator that you can use to work out what you will be able to claim depending on the vehicle that you use.

Tools and safety equipment

You can only claim tools or safety equipment that belong to you and that you bought specifically for work. But you won’t be able to claim tools that belong to others, like from your contractor for example. 

Examples of tools and safety equipment that you can claim would be:

• Power tools
• Drills
• Reflective vests
• Protective gloves
• Safety helmets

You can also claim the expense of cleaning and repairing any of your tools and equipment.

Rent

In some cases, you can potentially claim some of your rent. However, it’s more difficult for construction workers. HMRC can argue that most of your work would take place outside of your home and therefore you wouldn’t be eligible to claim.

Although the above is more likely to occur, in other instances where you are eligible, you can claim the Home Office Allowance:

• This is HMRC’s simplified expense rate, where you don’t have to do any calculations – hooray!

Another option would be to claim based on how much you use the space. You might be able to claim back more with this method, which is of course, the number one incentive.

• Let’s say you use your home as an office 10% of the time
• This could be for organising receipts, repairing or cleaning your tools, etc
• Depending on what you use, you can claim 10% of your rent or bills like electricity and gas

‼️ Disclaimer: you can only claim one of the ways we listed, not both. 

Things you may not know you can claim

• Your work phone bill 
• Builders’ liability insurance
• Accountancy fees (including our fee at TaxScouts) 

What you need to do before you can claim something

• You must be registered as self-employed
• You must also register for CIS
• Only claim for things used for work that you paid for out of pocket

It can be! Whether or not claiming the CIS deductions makes sense depends on your personal situation entirely. Although it might be worth it for some, for others, it might not. 

If your total expenses are less than £1,000 per tax year, then you can claim the Trading Allowance, which is a tax-free allowance. It’s easy to do and you don’t need to keep your receipts. 

You can also use our CIS Tax Rebate calculator to figure out which is the better option for you.