Does CIS apply to travel expenses and mileage?

Yes. As of October 2026, mileage, travel fuel, hotels and subsistence that a contractor pays you count as part of your Construction Industry Scheme (CIS) pay, so 20% (or 30%) is deducted from them like labour.

Many subcontractors expect travel money to be treated like materials. It is not. This page follows HMRC's CIS manual at CISR15080 and the CIS 340 guide, as checked on 16 October 2026.

The rule

CIS 340 says the deduction applies to any part of a payment that is for subsistence or travelling expenses. Any travelling expenses, including fuel, and subsistence paid to you or on your behalf go into the gross amount the contractor works the deduction out on.

HMRC's manual explains why. If a construction contract obliges the contractor to pay your expenses, those payments are part of the value of the contract. It makes no difference whether that promise is written, spoken or simply understood, or whether the contractor pays you, reimburses you, or pays the hotel or your credit card provider directly.

What is taxed and what is not

The last row is the "unless". HMRC's manual says no deduction is due where the contractor lets you use its own vehicles or accommodation, or pays a third party for them, as long as none of that cost is passed on to you. For free accommodation, nothing about it goes on your payment and deduction statement, and you must not claim the cost as your own expense, because you did not pay for it. The manual adds that such arrangements are not common and may point to employment rather than self-employment.

A worked example

A registered dryliner, not VAT registered, works a fortnight on a site 40 miles from home. The contractor agrees to pay labour of £1,600, a mileage allowance of £180 and £280 for digs, and the dryliner buys £140 of fixings and beads for the job. The invoice is £2,200.

The mileage and digs are inside the £2,060. If the contractor wrongly left them out, the deduction would be £320 instead of £412. That would be £92 too little taken, which the contractor has to account for, so expect the full amount to be deducted.

Claiming the travel back

The deduction is not a cost. It is tax paid in advance. GOV.UK tells sole traders to enter total pay before deductions as income and the total CIS taken as CIS deductions. So the £180 mileage and £280 digs are income on your return, and what you actually spent on travel and overnight stays goes in as expenses.

What you can claim follows the normal self-employed rules. GOV.UK allows fuel, hotel rooms and meals on overnight business trips, but not travel between home and a fixed place of work. HMRC's Business Income Manual (BIM37620) accepts home-to-site travel for an itinerant trader, such as a jobbing builder who moves from one temporary site to the next. For a van, you can claim actual costs or simplified expenses: 55p a mile for the first 10,000 business miles in 2026-27, then 25p. There is more on this in claiming travel from home to site.

What this means for you

Travel money from a contractor is not tax-free, however it is paid. Your monthly statement should show it inside the gross payment, with the deduction worked out on it. CIS is taken on the travel money, but the cost of the travel comes off your profit only at the year end, so regular site travel is one reason the CIS taken can end up more than the tax you owe. Keeping a mileage log is how you get it back.

Over-deducted CIS is usually claimed back through your tax return after the tax year ends. The sooner after 5 April you file, the sooner HMRC can repay you. Once you are in Making Tax Digital, HMRC adds your CIS deductions to your MTD tax return, and any refund is requested separately through HMRC online services.

Steps to get travel and CIS right

1. Agree with the contractor, before you start, whether travel, fuel and digs are paid on top of your labour price.
2. Show labour, materials and any travel allowance as separate lines on your invoice, so the materials figure is clear. The CIS deduction guide shows the calculation.
3. Check each monthly statement: travel paid to you should be inside the gross payment, and only your materials should reduce the amount taxed.
4. Keep a log of every business journey, with date, site and miles, plus receipts for hotels and meals away.
5. At the year end, include the travel payments in your income and claim your real travel costs, or the mileage rate, as expenses.

The free MTD check shows when Making Tax Digital starts for you, and the trades section has more on CIS.