What expenses can CIS subcontractors claim?

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS deductions, refunds, verification, and monthly return responsibilities, without jargon. Our aim is to help you stay compliant with HMRC, avoid penalties, and keep your cash flow and records under control.

This is one of the most important questions for anyone working under the Construction Industry Scheme, and from experience it is also one of the areas where people either save the most tax or accidentally overpay it year after year. CIS subcontractors often focus on the deductions coming off their income and assume that is the end of the story, when in reality allowable expenses play a huge role in determining how much tax you actually owe.

The key thing to understand from the outset is that CIS does not limit what expenses you can claim. CIS is simply a method HMRC uses to collect tax in advance. Your final tax position is based on your true profits, and profits are calculated after deducting allowable expenses. Claiming the right expenses, and only the right expenses, is how you reduce your tax bill legitimately and stay compliant.

In this article I will explain what expenses CIS subcontractors can claim, how HMRC looks at expenses, the most common categories relevant to construction work, and the mistakes I see time and again. I will focus on practical, real world guidance rather than theory, because this is where most confusion sits.

The basic rule HMRC applies to expenses

Before getting into specific expense types, it is essential to understand the rule HMRC applies to all expense claims.

An expense must be incurred wholly and exclusively for the purposes of your trade.

In simple terms, that means the cost must be necessary for your work as a subcontractor and not have a significant private element. If there is a mix of business and personal use, only the business portion is allowable.

This rule applies whether you are under CIS or not. CIS does not change it, relax it, or tighten it. It simply affects when tax is collected.

CIS expenses and how tax is actually calculated

Another misunderstanding I see regularly is people thinking expenses somehow reduce CIS deductions directly. They do not.

CIS deductions are taken from your income before expenses are considered. Expenses come into play later, when your Self Assessment tax return is prepared.

You declare your gross CIS income, then deduct allowable expenses to arrive at your taxable profit. HMRC then calculates the tax and National Insurance due on that profit and sets the CIS already deducted against the bill.

This is why many CIS subcontractors receive tax refunds, particularly if their expenses are high.

Tools and equipment

Tools and equipment are one of the most common and important expense categories for CIS subcontractors.

Small tools and everyday equipment are usually treated as revenue expenses and can be deducted in full in the year you buy them. This includes items such as hand tools, power tools, batteries, extensions, measuring equipment, and similar items needed to carry out your work.

More expensive tools or equipment that are expected to last several years are usually treated as capital items. These are claimed through capital allowances rather than as day to day expenses.

In practice, the Annual Investment Allowance means many subcontractors still get full tax relief in the year of purchase, but the classification matters for record keeping and compliance.

The key points HMRC looks at are necessity and business use. If a tool is genuinely required for your work and not used privately to any meaningful extent, it is normally allowable.

Protective clothing and safety equipment

Protective clothing and safety equipment required for construction work are generally allowable expenses.

This includes items such as hard hats, safety boots, gloves, goggles, ear protection, and high visibility clothing that is required to comply with site rules.

What is not allowable is ordinary clothing, even if you wear it for work. Jeans, t shirts, and general workwear are not considered protective clothing in HMRC’s eyes.

This distinction often frustrates people, but it is well established in tax law.

Mileage and travel costs

Travel is another major expense category for CIS subcontractors, but it is also one of the most misunderstood.

Travel between home and a permanent place of work is not allowable. Travel to temporary work locations usually is.

In construction, most sites are considered temporary workplaces, particularly if you move between sites regularly. This means mileage or travel costs to and from site can often be claimed.

You can claim either:.

• Mileage using HMRC’s approved mileage rates

• Actual vehicle running costs, apportioned for business use

Most subcontractors use mileage rates, as they are simpler and often effective.

Parking costs, tolls, and congestion charges incurred for work can also be claimed. Fines and penalties cannot.

Keeping a simple mileage log makes these claims far easier to support.

Accommodation and subsistence

Accommodation costs can be allowable if you are required to stay away from home for work and the travel is temporary in nature.

For example, if you take on a short term contract far from home and need to stay overnight, accommodation costs are usually allowable.

Subsistence, such as meals while working away from home, can also be claimed in these circumstances.

What HMRC does not allow is claiming everyday meals when working locally or treating normal living costs as business expenses.

This area is very fact specific, and from experience it is one where advice can be helpful if your work involves regular travel or overnight stays.

Phone and communication costs

Phone costs are commonly claimed and usually accepted, provided they are reasonable.

If you have a separate business phone or SIM used solely for work, the full cost is normally allowable.

If you use a personal phone for both work and private use, you can claim a reasonable proportion of the cost relating to business use.

Internet costs can be treated in a similar way, particularly if you use the internet to manage work, emails, or invoicing.

The key is apportionment. Claiming 100 percent of a personal phone contract is rarely appropriate unless it is genuinely used only for business.

Insurance costs

Insurance is a necessary part of working in construction, and most relevant policies are allowable expenses.

This includes public liability insurance, employers liability insurance if applicable, professional indemnity insurance, and tools insurance.

These costs are clearly incurred for the purpose of the trade and are generally straightforward to claim.

Training and qualifications

Training costs can be allowable, but the detail matters.

Training that maintains or updates existing skills is usually allowable. For example, health and safety courses, renewals of site certifications, or training required to continue working in your trade are normally acceptable.

Training that gives you a completely new skill or qualifies you for a new trade is usually not allowable, as HMRC sees this as capital or personal development rather than maintaining your existing trade.

This distinction often catches people out, particularly where courses feel work related but actually change the nature of the work you can do.

Accountancy and professional fees

Accountancy fees relating to your business are allowable expenses.

This includes the cost of preparing your Self Assessment tax return, dealing with CIS matters, and providing general tax advice related to your trade.

Legal fees related to business matters, such as contract reviews or disputes, can also be allowable, depending on the circumstances.

Personal legal fees are not allowable.

Materials and consumables

Materials and consumables used in your work are generally allowable expenses.

This includes items that are used up on jobs, such as fixings, adhesives, sealants, and similar consumables, provided you are responsible for supplying them and they are not reimbursed separately by the contractor.

If you are reimbursed for materials, you should not also claim them as expenses, as this would amount to double relief.

Hire of equipment

If you hire tools or equipment rather than owning them, the hire costs are usually allowable.

This is common for specialist equipment or machinery needed for specific jobs.

Hire costs are treated as revenue expenses and deducted in the period they are incurred.

Home office and working from home

Some CIS subcontractors carry out administrative work from home, such as invoicing, record keeping, and planning.

In these cases, you may be able to claim a proportion of home running costs or use HMRC’s simplified expenses for working from home.

The claim must be reasonable and reflect actual business use. You cannot claim household costs simply because you live there.

Bank charges and finance costs

Business bank charges are allowable expenses.

Interest on business loans or overdrafts can also be allowable, provided the borrowing relates to the business.

Personal bank charges and interest are not allowable unless they relate specifically to business use.

Clothing and personal appearance

This is an area where many claims fail.

Ordinary clothing, even if it gets dirty or is only worn for work, is not allowable. Branded uniforms or protective clothing required for safety can be allowable.

Personal grooming costs, haircuts, and similar expenses are not allowable, even if you feel they are necessary for work.

Expenses you cannot claim

Understanding what you cannot claim is just as important as knowing what you can.

You generally cannot claim:.

• Personal living costs

• Ordinary clothing

• Fines and penalties

• Private medical costs

• Personal entertainment

Trying to claim these can increase the risk of HMRC queries.

Keeping proper records

HMRC expects you to keep records of income and expenses for several years.

You should keep receipts, invoices, bank statements, and mileage logs to support your claims.

Good records not only support your tax return but also make the process far less stressful.

From experience, poor records are one of the main reasons people underclaim or face problems during HMRC checks.

Common mistakes CIS subcontractors make with expenses

There are several mistakes I see repeatedly.

One is assuming CIS deductions mean expenses do not matter. They do.

Another is claiming expenses without evidence or claiming round figures without justification.

I also see people miss out on legitimate expenses because they are unsure what is allowed and prefer to play it safe.

How expenses affect refunds and payments on account

Claiming expenses correctly reduces your taxable profit.

Lower profit means lower tax and National Insurance, and when CIS deductions exceed that liability, a refund arises.

Expenses also affect payments on account. Accurate returns ensure payments are based on reality, not inflated figures.

Planning ahead and staying compliant

From a forward looking point of view, understanding expenses helps with planning.

You can budget more accurately, price work better, and avoid surprises when tax bills are calculated.

Claiming expenses is not about pushing boundaries, it is about ensuring you pay the correct amount of tax, no more and no less.

When professional advice helps

While many expense claims are straightforward, some situations benefit from advice, particularly where private use, accommodation, or larger purchases are involved.

A CIS accountant can help ensure claims are correct, maximised where appropriate, and properly supported.

Final thoughts

CIS subcontractors can claim a wide range of expenses, and these claims play a crucial role in determining how much tax is actually due.

CIS does not restrict expenses. It simply changes the timing of tax payments. Your final tax bill depends on your true profits, and profits depend on allowable expenses.

In my experience, subcontractors who understand expenses and keep good records feel far more in control of their finances and far less anxious about tax. When expenses are claimed correctly and consistently, CIS becomes a manageable system rather than a source of frustration.

The goal is not to push the rules, but to use them properly. Do that, and you reduce tax legitimately, stay compliant, and keep more of what you earn.

You may also find our guidance on How do I claim for materials supplied on a CIS job and What records should I keep for CIS helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.