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For 2026-27, a subcontractor at 20% whose costs are about a fifth of their pay can expect roughly £2,800 to £3,100 back on £25,000 to £60,000 of pay. Below £12,570 profit, every penny deducted comes back.
Under the Construction Industry Scheme (CIS), the deductions your contractors take are advance payments towards your Income Tax and National Insurance. Your real bill depends on your profit after costs, and the first £12,570 of profit is covered by the personal allowance. The refund is the difference between what was deducted and what you owe. The table below works it out for seven sets of figures using 2026-27 rates, as published on GOV.UK.
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Estimated refunds for 2026-27
All examples assume a sole trader in England, Wales or Northern Ireland, with no other income, deductions at 20% on labour only, and the full personal allowance.
| Pay before deductions | Costs | Profit | Deducted at 20% | Income Tax | Class 4 NI | Estimated refund |
|---|---|---|---|---|---|---|
| £15,000 | £3,000 | £12,000 | £3,000.00 | £0.00 | £0.00 | £3,000.00 |
| £25,000 | £4,000 | £21,000 | £5,000.00 | £1,686.00 | £505.80 | £2,808.20 |
| £30,000 | £6,000 | £24,000 | £6,000.00 | £2,286.00 | £685.80 | £3,028.20 |
| £40,000 | £8,000 | £32,000 | £8,000.00 | £3,886.00 | £1,165.80 | £2,948.20 |
| £40,000 | £15,000 | £25,000 | £8,000.00 | £2,486.00 | £745.80 | £4,768.20 |
| £50,000 | £10,000 | £40,000 | £10,000.00 | £5,486.00 | £1,645.80 | £2,868.20 |
| £70,000 | £12,000 | £58,000 | £14,000.00 | £10,632.00 | £2,416.60 | £951.40 |
The rates used: Income Tax at 20% on profit between £12,571 and £50,270 and 40% above that, and Class 4 National Insurance at 6% between £12,570 and £50,270 and 2% above. Class 2 National Insurance is treated as paid once profit reaches £7,105, so it adds nothing to these bills. This is an estimate based on the figures shown and the rules for 2026-27. Your actual figure may differ.
The rule of thumb behind the table
On the same assumptions as the table (20% taken from all your pay, no other income, outside Scotland), and only while your profit is between £12,570 and £50,270, the refund works out exactly as:
- £3,268.20, which is 26% of the £12,570 personal allowance
- plus £26 for every £100 of costs
- minus £6 for every £100 of pay
Check it on the £40,000 row: £3,268.20 + £2,080 − £2,400 = £2,948.20. That is why the refund barely moves as turnover rises, and why costs matter so much. Outside that range it does not work. Below £12,570 profit you get back everything deducted, as the £15,000 row shows. Above £50,270 the 40% rate takes over and the refund falls quickly, as the £70,000 row shows.
What this means for you
Your costs are the lever you control. Moving from £8,000 to £15,000 of costs on £40,000 of pay lifts the estimated refund from £2,948.20 to £4,768.20. Every receipt for materials you paid for, van running costs, tools and phone use counts, as long as the cost is allowable.
The second lever is the deduction rate. If you are not registered, or the contractor cannot verify you, they take 30%. Your bill does not change, so the extra comes back on your return. On the £30,000 row, 30% would mean £9,000 deducted and an estimated refund of £6,028.20. You wait until after the tax year for that money, so registering properly is worth doing.
What can make your refund smaller
- Other income. Wages from a job or rent use up your personal allowance first, so less of your CIS profit is tax-free.
- Scottish taxpayers. Scotland has its own Income Tax bands, so these figures do not apply.
- Older tax debts. HMRC's manual says repayment is due only where deductions exceed the tax and Class 4 NI for the year and any unpaid tax on earlier years' profits.
- Payments due soon. GOV.UK says you may not get a refund if you have tax due in the next 45 days. It is taken off that bill instead.
- Materials in the invoice. Deductions are taken on labour only. If you charge materials you paid for, the deducted figure is lower than 20% of the whole invoice.
Steps to estimate your own refund
- Add up the gross pay on all your payment and deduction statements for the tax year.
- Add up the deductions on the same statements.
- Total your allowable business costs and take them off gross pay to get your profit.
- Work out Income Tax and Class 4 National Insurance on that profit using the rates above.
- Take the tax and NI away from the deductions. A positive figure is your estimated refund.
- File your tax return after 5 April to claim it. Over-deducted CIS is claimed back through your tax return. The sooner after 5 April you file, the sooner HMRC can repay you.
Use the free MTD check to see whether Making Tax Digital applies to you from April 2027, and visit the trades section for more on CIS.
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Questions people ask
What is a typical CIS refund?
There is no official average. In our 2026-27 examples, a subcontractor at 20% with costs of about a fifth of their pay gets back roughly £2,800 to £3,100 on £25,000 to £60,000 of pay. Higher costs mean a bigger refund.
Why does a bigger turnover not mean a bigger refund?
At 20% deductions and basic-rate profits, each extra £100 of pay adds £20 of deductions but £26 of Income Tax and Class 4 National Insurance. So the refund shrinks by about £6 for every £100 more you earn.
How much do my expenses add to the refund?
For a basic-rate subcontractor in 2026-27, each £100 of allowable costs cuts the bill by £26, made up of £20 Income Tax and £6 Class 4 National Insurance. Keeping receipts is the most reliable way to raise the refund.
What if my contractor took 30%?
Your tax bill is the same, so the extra 10% comes back as part of the refund. On £30,000 of pay and £6,000 of costs, a 30% deduction gives an estimated refund of £6,028.20 instead of £3,028.20.
Can the refund be less than the calculator says?
Yes. Other income, Scottish tax rates, tax unpaid from earlier years, or a payment on account due within 45 days can all reduce what reaches your bank account.
Sources
- Income Tax rates and Personal Allowances (GOV.UK)
- Self-employed National Insurance rates (GOV.UK)
- What you must do as a CIS subcontractor: Get paid (GOV.UK)
- What you must do as a CIS subcontractor: Pay tax and claim back deductions (GOV.UK)
- CISR75020: SA subcontractors, claims for credit in SA returns (HMRC manual)
- Self Assessment tax returns: Claiming a tax refund (GOV.UK)
This is general information to help you understand the rules. It isn't tailored to your circumstances, so check your own position before acting on it.
Righto Tax is a trading name of NJG Consultancy Ltd, registered in England and Wales, company number 16095900. Registered office: Jubilee House, East Beach, Lytham St Annes, FY8 5FT.
All CIS guides for subcontractors
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