Industry guide
Tradesperson
Trades work can generate significant turnover quickly. Get your compliance right early — especially the Construction Industry Scheme (CIS).
Understand the Construction Industry Scheme (CIS)
If you work as a subcontractor for contractors (builders, developers, main contractors), the contractor must deduct 20% (or 30% if you're not registered) from your payments and send it to HMRC on your behalf. Register as a CIS subcontractor at gov.uk to get the lower 20% rate.
Register as self-employed
In addition to CIS registration, register for Self Assessment. CIS deductions count as payments on account against your final tax bill.
Track materials separately
Under CIS, contractors only deduct from labour — not materials. Keep clear records of what you charged for parts versus labour on every invoice.
VAT threshold
Trades businesses often hit £90,000 turnover faster than expected once materials are included. Monitor monthly. Voluntarily registering for VAT may benefit you if most of your clients are VAT-registered businesses.
Claim capital allowances on tools
Power tools, ladders, vans, and specialist equipment qualify for capital allowances (Annual Investment Allowance up to £1m). This can significantly reduce your tax bill in years with large equipment purchases.
Common mistakes
Not registering for CIS before starting subcontract work
Without registration, contractors are legally required to deduct 30% instead of 20%. That 10% difference means thousands of pounds sitting with HMRC until your tax return is filed.
Including materials in the labour total on invoices
CIS deductions only apply to labour. Mixing them together means the contractor deducts from your materials too, which you must then reclaim — adding unnecessary complexity.
Operating without required trade certifications
Working on gas or electrical installations without the relevant certification is illegal. It also invalidates your insurance and exposes you to unlimited personal liability.