CIS subcontractors use the ordinary allowable-business-cost rules. Keep evidence for tools, qualifying travel, protective clothing and other genuine trade costs, with private use separated. Expenses reduce profit; CIS deductions are a tax credit and should not be entered as another expense.
The basic test
GOV.UK’s self-employed expenses guide says you can only claim costs that are for the business. Keep receipts and records. You do not send every receipt with the return, but HMRC can ask later.
Costs construction subcontractors often look at
- Tools and equipment — small tools and short-life items may be allowable expenses; longer-term plant and machinery often sit under capital allowances (rules depend on cash basis vs traditional accounting).
- Protective / work clothing — GOV.UK allows uniforms and protective clothing needed for the work. Everyday jeans, trainers or ordinary coats are not allowable even if you wear them on site.
- Travel between jobs — fuel, parking, public transport and similar for business journeys can qualify. Travel between home and a regular place of work generally does not.
- Vehicle costs — insurance, repairs, fuel and related running costs for business use, or simplified mileage flat rates where you choose that method. Private miles need a fair split.
- Phone and admin — business calls, software, stationery; split private use on a home broadband or mobile contract.
- Insurance and professional costs — public liability, tools cover, and accountancy fees for the business where they relate to the trade.
- Materials — goods you buy to use on jobs can be business costs; remember materials also affect how CIS deductions are calculated on the contractor’s side.
What usually does not qualify
- Ordinary clothing
- Home-to-work commuting
- Parking fines or penalties
- Private holidays, personal phone use, or family costs parked through the business
How expenses interact with CIS
Expenses reduce taxable profit. Lower profit can mean a larger CIS repayment when deductions already taken exceed the final bill — see CIS tax refunds. They do not change the 20%/30% withheld on each payslip. Keep payment statements separate from expense folders so income and costs do not get mixed.
Also remember: Making Tax Digital qualifying-income tests generally look at turnover before expenses, not at the profit left after tools and travel. Claiming CIS expenses correctly still matters for Self Assessment, but it does not “expense you out” of MTD if gross income is above the threshold. Confirm with Check if MTD applies when your construction turnover is substantial, and read TaxSimba’s Making Tax Digital overview only if you are genuinely in scope.
Worked sketch (illustrative only)
Gross CIS labour £48,000; CIS deducted £9,600; allowable expenses £11,000. Taxable trading profit starts near £37,000 before other adjustments. The £9,600 still credits the Self Assessment bill. Skipping the £11,000 expenses would inflate profit and shrink any refund — without changing what contractors already withheld.
TaxSimba’s Self Assessment service helps sole-trader subcontractors sort allowable costs and CIS credits with an accountant. We do not promise every receipt will be accepted, and we do not sell “maximised CIS refund” schemes. Start Self Assessment with TaxSimba.
Explain mixed business and private costs
Illustrative preparation example.
A phone or vehicle is used for both work and personal activity. Keep the invoice and a reasonable record supporting the business element. The payment being made from a business account does not establish that the entire amount is an allowable trade cost.
Check: What supports the business purpose and the private-use adjustment?
| Check | Practical action |
|---|---|
| What was the business purpose? | Keep evidence and descriptions; a business bank payment alone does not establish allowability. |
| Is there mixed private use? | Record a supportable split instead of claiming the full cost automatically. |
| Is this equipment or a running cost? | Confirm asset treatment under the applicable accounting basis and avoid duplicate claims. |
Do expenses reduce CIS withheld on old payments?
Not retrospectively through the expense claim. Allowable costs affect annual profit; actual CIS deductions are separately credited in the return.
Can I claim normal clothes worn on site?
Ordinary clothing is generally not deductible. Uniforms and protective clothing have different rules; retain the item details.
Download a checklist for this guide
- Group receipts by business cost type.
- Write the business purpose for unusual items.
- Record private-use splits for vehicles and phones.
- List equipment and the accounting basis used.
- Keep CIS credit totals separate from expense totals.