Can a limited company claim back CIS deductions?

Yes. A limited company sets its CIS deductions against its own PAYE, National Insurance and CIS bills each month, then claims any excess after the tax year ends, which for 2026-27 means from 6 April 2027.

This is a different system from the one for sole traders. A sole trader's deductions come off their tax bill in the Self Assessment return. A company's deductions are used first through its payroll, month by month. The rules below follow GOV.UK and HMRC's Construction Industry Scheme manual (CISR) as checked on 16 October 2026.

How the offset works

GOV.UK says CIS deductions are advance payments towards your company's tax. HMRC's manual explains that the law treats them as paid first towards the company's "relevant liabilities": the PAYE tax, National Insurance, student loan repayments and CIS deductions it owes HMRC as an employer or contractor.

In practice, each month:

1. Send your Full Payment Submission (FPS) for payroll as usual.
2. Send an Employer Payment Summary (EPS) with the total CIS deductions suffered so far in the tax year.
3. HMRC takes those deductions off what you owe, and you pay any balance by the usual date.

GOV.UK says to send the EPS by the 19th of the following tax month so HMRC can apply the reduction. The PAYE bill itself is due by the 22nd of the next tax month if you pay monthly and electronically.

If the deductions are more than the month's bill, you pay nothing and tell HMRC in the EPS that you have nothing to pay. The excess carries forward to later months, but only within the same tax year. If you pay PAYE quarterly, HMRC's manual says the same offset runs against each quarter's bill.

What happens at the end of the tax year

HMRC's manual says the regulations stop HMRC repaying a company subcontractor until the tax year has ended and the company has paid everything it owes as an employer or contractor. GOV.UK's two in-year exceptions are in the last row.

To claim, the company must have sent all its FPS and EPS returns, any monthly CIS returns if it is also a contractor, and its Company Tax returns. You claim online, signing in with the details linked to the company's Corporation Tax and PAYE accounts, or by post. You need the overpayment amount (total deductions taken, minus the amount already used to pay tax), the company's PAYE reference and Corporation Tax reference, and bank details for the refund.

What HMRC checks

After a claim, HMRC checks:

• that your figures match what it holds, including what your contractors have told HMRC
• whether the company owes tax that the deductions must pay first

If something does not match, HMRC may ask for copies of your payment and deduction statements and bank statements. If you know a figure will not match, you can send them with the claim. If you do not answer by HMRC's deadline, GOV.UK says HMRC will change the claim based on what it has, and you cannot make any more claims in that tax year. You can appeal.

A worked example

A groundworks company has £2,000 of CIS deducted in each of the first 3 tax months of 2026-27 (6 April to 5 July 2026), then £400 a month for the rest of the year as its work shifts to private clients. Its own payroll bill (PAYE and National Insurance for the director and one employee) is £1,000 a month.

The company pays nothing for 8 months and £2,400 in total for the year. Nothing is left to claim.

Now suppose deductions stayed at £2,000 a month all year. That is £24,000 against a £12,000 payroll bill, leaving £12,000 unused at 5 April 2027. Once all its returns for the year are in, the company can claim it from 6 April 2027, and HMRC uses it for any overdue PAYE or Corporation Tax before repaying the rest. These are illustrations only.

What this means for you

If your company is a CIS subcontractor, run the offset every month through your payroll software, not at the year end. Keep a record of how much of the deductions you have used each month; GOV.UK says form CIS132 can be used for this. Keep every payment and deduction statement, because those are what HMRC asks for if the figures do not match. Our service is for sole traders, not limited companies.

Steps to claim back a company's CIS deductions

1. Collect the payment and deduction statements from every contractor for the tax year.
2. Each month, enter the year-to-date CIS deductions on the EPS alongside your FPS.
3. Pay only the balance of your PAYE bill, or tell HMRC there is nothing to pay.
4. After 5 April, check that all FPS, EPS, CIS and Company Tax returns are in.
5. Work out the excess and claim it online through HMRC, or by post.
6. Answer any HMRC request for evidence by the deadline it gives.

If you are weighing up a company against working as a sole trader, the free MTD check shows when Making Tax Digital would start for you as a sole trader, and the trades section has more on CIS.