Can CIS accountants help with business expenses?

Can CIS Accountants Help with Business Expenses in the UK?

Understanding the CIS Framework in Practice

The Construction Industry Scheme (CIS) is one of HMRC’s most scrutinised regimes. It governs how contractors must deduct tax at source from subcontractors’ payments. While most subcontractors are aware of the 20% or 30% deduction rules, far fewer understand how business expenses interact with CIS and how a specialist accountant can help maximise legitimate claims.

A CIS tax accountant in the uk does far more than simply reconcile deductions. Their role is to ensure subcontractors and small construction businesses are not overpaying tax, by correctly identifying allowable expenses, applying HMRC guidance, and preparing accurate self-assessment returns. In practice, this can mean thousands of pounds saved each year.

Why Business Expenses Matter Under CIS

When a subcontractor receives payment under CIS, the contractor deducts tax before the money reaches the subcontractor’s account. HMRC treats this deduction as an advance payment towards the subcontractor’s annual tax liability. The subcontractor must still file a self-assessment tax return, where business expenses are offset against income.

For example, if a subcontractor earns £40,000 gross in a tax year, with £8,000 deducted under CIS, their taxable profit is not £40,000. If they have £10,000 of legitimate business expenses, their taxable profit reduces to £30,000. This directly lowers the income tax and National Insurance due, often resulting in a repayment from HMRC.

Common Categories of Allowable Expenses

A CIS accountant will carefully review expenses to ensure they meet HMRC’s “wholly and exclusively for business” test. Some of the most common categories include:

• Tools and equipment – drills, saws, PPE, and other items essential for construction work.

• Vehicle costs – mileage claims, fuel, insurance, repairs, or lease payments where the vehicle is used for business.

• Travel and subsistence – costs of travelling to temporary worksites, overnight accommodation, and meals when working away.

• Professional fees – accountancy costs, union subscriptions, and trade association memberships.

• Training and certifications – CSCS cards, health and safety courses, or specialist training required for contracts.

• Phone and internet – proportion of bills where used for business purposes.

• Protective clothing – steel-toe boots, helmets, high-visibility jackets.

A CIS accountant ensures these are properly documented, apportioned where necessary, and claimed in line with HMRC rules.

Real-World Scenario: Subcontractor with Vehicle Costs

Consider a subcontractor who drives 20,000 miles a year, with 15,000 miles for business. HMRC allows mileage claims at 45p per mile for the first 10,000 miles, and 25p thereafter.

• First 10,000 miles: 10,000 × £0.45 = £4,500

• Remaining 5,000 miles: 5,000 × £0.25 = £1,250

• Total claim: £5,750

A CIS accountant ensures this claim is correctly calculated and evidenced, reducing taxable profit substantially. Without professional guidance, many subcontractors either under-claim or fail to keep adequate records, losing out on tax relief.

How CIS Accountants Differ from General Accountants

While any qualified accountant can prepare a tax return, CIS specialists understand the nuances of construction industry rules. They are familiar with:

• HMRC’s strict stance on travel expense claims for site-based workers.

• The difference between allowable tools and capital equipment requiring capital allowances.

• How to reconcile monthly CIS statements with gross income.

• The timing of repayments, often due after 31 January self-assessment deadlines.

This expertise ensures subcontractors avoid HMRC enquiries and penalties, while maximising legitimate expense claims.

Key Tax Thresholds Relevant to CIS Workers (2025/26 Tax Year)

Below is a table summarising the main thresholds subcontractors should be aware of:

National Insurance for self-employed individuals (Class 4) applies at 6% on profits between £12,570 and £50,270, and 2% above £50,270. CIS accountants factor these into repayment calculations, ensuring subcontractors are not overcharged.

Practical Example: CIS Repayment Case

A subcontractor earns £35,000 gross, with £7,000 deducted under CIS. They have £8,000 of allowable expenses.

• Gross income: £35,000

• Less expenses: £8,000

• Taxable profit: £27,000

• Tax due: £27,000 – £12,570 = £14,430 × 20% = £2,886

• NIC due: £27,000 – £12,570 = £14,430 × 6% = £866

• Total liability: £3,752

Since £7,000 was already deducted under CIS, HMRC repays £3,248. A CIS accountant ensures this repayment is processed quickly, often within weeks of filing.

Can CIS Accountants Help with Business Expenses in the UK?

Capital Allowances and CIS

One area where subcontractors often miss out is capital allowances. HMRC distinguishes between day-to-day expenses and capital expenditure. For example, buying a hammer or drill is usually treated as an expense, but purchasing a van or large machinery is capital expenditure.

CIS accountants ensure these are claimed correctly under the Annual Investment Allowance (AIA), which currently allows businesses to deduct up to £1 million of qualifying expenditure on plant and machinery each year. For subcontractors investing in vehicles or equipment, this can be a significant tax relief.

A practical example:

• A subcontractor buys a van for £25,000 in May 2025.

• Under AIA, the full £25,000 can be deducted from taxable profits in that year.

• If their profit before allowances was £50,000, it reduces to £25,000, saving £5,000 in tax at the 20% basic rate.

Without a CIS accountant, many subcontractors mistakenly treat such purchases as non-deductible or spread costs incorrectly.

Record-Keeping and HMRC Expectations

HMRC places heavy emphasis on accurate record-keeping. CIS accountants guide clients on maintaining receipts, mileage logs, and CIS deduction statements. In practice, this means:

• Keeping monthly CIS statements from contractors as proof of deductions.

• Retaining invoices for tools, materials, and professional fees.

• Recording mileage with dates, destinations, and purpose of travel.

• Using accounting software or spreadsheets to reconcile income and expenses.

Failure to keep adequate records can result in HMRC disallowing expense claims, leading to higher tax bills and potential penalties. CIS accountants often set up systems tailored to construction workers who may not have time for complex bookkeeping.

HMRC Enquiry Risks

Construction is one of HMRC’s highest-risk sectors for compliance checks. CIS accountants help reduce the risk of enquiry by ensuring:

• Expense claims are reasonable and proportionate to income.

• Travel claims are correctly categorised as temporary workplace journeys.

• Dual-purpose expenses (like mobile phones or home office costs) are apportioned fairly.

• Capital allowances are claimed only on qualifying assets.

For example, HMRC frequently challenges subsistence claims where subcontractors attempt to deduct daily lunches. A CIS accountant explains that only meals incurred while working away from home overnight are allowable, preventing costly disputes.

Supporting Landlords and Incorporated Businesses

CIS accountants also assist landlords and incorporated businesses involved in construction. For landlords developing or refurbishing properties, CIS rules apply when paying subcontractors. Accountants ensure:

• Correct CIS deductions are made and reported to HMRC.

• Expenses such as materials, professional fees, and finance costs are properly allocated.

• VAT implications are considered, especially for property development.

For incorporated construction businesses, CIS accountants manage payroll, corporation tax, and VAT alongside CIS compliance. This holistic approach ensures businesses remain compliant across all tax areas.

Interaction with Self-Assessment Deadlines

CIS accountants play a crucial role in meeting deadlines. The self-assessment deadline is 31 January following the end of the tax year (which runs 6 April to 5 April). Subcontractors must file returns and pay any outstanding tax by this date.

Accountants ensure:

• CIS deductions are reconciled against tax liabilities.

• Repayment claims are submitted promptly.

• Penalties for late filing (£100 minimum, plus daily penalties after three months) are avoided.

In practice, many subcontractors receive repayments within weeks of filing, provided records are accurate. CIS accountants streamline this process, often filing electronically to speed up HMRC processing.

Example: Subcontractor with Mixed Income

A subcontractor earns £30,000 under CIS and £10,000 from private jobs where no deductions are made. They also have £9,000 of expenses.

• CIS income: £30,000 (with £6,000 deducted at source).

• Private income: £10,000.

• Total income: £40,000.

• Less expenses: £9,000.

• Taxable profit: £31,000.

• Tax due: (£31,000 – £12,570) × 20% = £3,686.

• NIC due: (£31,000 – £12,570) × 6% = £1,104.

• Total liability: £4,790.

• CIS deducted: £6,000.

• Repayment due: £1,210.

A CIS accountant ensures both income streams are correctly reported, avoiding HMRC penalties and securing the repayment.

The Role of CIS Accountants in Business Growth

Beyond compliance, CIS accountants advise on structuring businesses for growth. For example:

• Advising when to incorporate a sole trader business to benefit from corporation tax rates (currently 25% for profits over £250,000, with marginal relief between £50,000 and £250,000).

• Helping subcontractors register for VAT when turnover exceeds £90,000 (2025/26 threshold).

• Guiding on pension contributions and tax-efficient savings.

This proactive advice ensures subcontractors not only remain compliant but also build sustainable businesses.

Table: Key Deadlines and CIS Responsibilities

CIS accountants keep clients on track with these obligations, preventing penalties and ensuring repayments are not delayed.

Practical Guidance for Subcontractors

From experience, the most common mistakes subcontractors make include:

• Failing to claim mileage correctly.

• Treating personal clothing as business expense.

• Forgetting to reconcile CIS statements with income.

• Missing deadlines due to poor organisation.

CIS accountants address these issues by providing clear guidance, setting up systems, and offering ongoing support. In many cases, the cost of accountancy fees is outweighed by the tax savings achieved.