This is a guide, not tax advice — check anything material with an accountant or the Low Incomes Tax Reform Group.
Register as a sole trader
Tell HMRC you're self-employed and register for Self Assessment at gov.uk. You'll get a 10-digit UTR and a Government Gateway login. The legal deadline is 5 October in your second tax year, but register straight away — late registration risks a £100 penalty.
The Construction Industry Scheme (CIS)
If you work for a contractor (not directly for homeowners), they deduct tax from your labour before paying you. It's advance tax, and the rate depends on your status:
| Status | Deduction |
|---|---|
| Registered subcontractor | 20% |
| Not registered | 30% |
| Gross payment status | 0% |
Register — it's free and the 10% difference is real money. On £1,000 of labour, registered you're paid £800; unregistered £700. Crucially, CIS applies to labour only — materials are excluded, so always split labour and materials on your invoice. The CIS calculator shows the deduction and your take-home; the invoice generator keeps labour and materials separate.
Self Assessment
Once a year you report income (all invoices raised) minus allowable expenses, and pay any tax by 31 January. CIS already deducted counts as tax paid, not income.
Allowable expenses include: van and fuel (or 45p/mile up to 10,000 miles), tools and equipment, materials, the business share of phone and broadband, insurance, training, and bad debts. Not allowable: meals, personal clothing, or the capital cost of a van bought outright (that's a capital allowance instead).
National Insurance
Class 2 is a small flat amount (and not required above the profit threshold, though you can pay voluntarily for your State Pension). Class 4 is 8% on profits between £12,570 and £50,270, then 2% above — automatic on your return.
The CIS refund most people miss
Because contractors deduct a flat 20% from labour with no personal allowance and no expenses applied, once you file with your allowance and costs counted, many subcontractors have overpaid and are owed a refund.
Example: £50,000 turnover, £10,000 CIS deducted, £8,000 expenses → £42,000 profit. Income tax ≈ £5,886, Class 4 ≈ £2,354 → ~£8,240 liability. Against £10,000 already deducted, that's a ~£1,760 refund. File accurately and HMRC reconciles it. Track deductions through the year in Get Paid so nothing's missed.
Sole trader or limited company?
Stay a sole trader while you're getting going — simpler returns, no company filings, fine under ~£80–100k. A limited company can save tax and add liability protection once you're established, but it's rarely worth switching in the first few years. Review it with an accountant when your profits climb.
Common mistakes
- Not registering for CIS and losing 30% instead of 20%.
- Lump-sum invoices — CIS then gets deducted from materials too. Split them.
- Missing the refund — file, with expenses, every year.
- No receipts — keep them for six years or you can't claim.