How to Start a Building and Construction Business in the UK

Starting a building business in the UK is a solid career move if you have the skills and experience. The construction industry is one of the largest sectors in the country, and there is always demand for reliable builders. But the tax and regulatory requirements are more involved than many other trades, especially around the Construction Industry Scheme (CIS).

This guide walks you through everything you need to know to get your building business set up properly.

Qualifications and Competence Cards

There is no single mandatory qualification to work as a builder in the UK, but in practice you will need:

• CSCS card (Construction Skills Certification Scheme) — required on most construction sites. You need to pass the CITB Health, Safety and Environment test.
• Relevant NVQs — Level 2 or 3 in your specialism (bricklaying, groundwork, general building, etc.)
• First aid certification — increasingly expected
• SMSTS or SSSTS — site management safety training, essential if you run your own sites

If you carry out certain types of work — gas, electrics, or structural work — additional certifications and registrations are legally required.

Sole Trader or Limited Company?

Many builders start as sole traders. It is the simplest route and keeps your costs down while you build up your client base.

However, construction is one of the industries where the choice matters more than most, because of how the Construction Industry Scheme works:

• Sole traders registered with CIS have deductions taken from payments by contractors (usually 20%, or 30% if not registered). These deductions count as advance payments of your tax.
• Limited companies registered with CIS also have deductions taken, but can apply for gross payment status if they meet certain criteria.

If you mainly work as a subcontractor for larger firms, operating through a limited company can offer tax advantages once your profits are significant. If you work directly for homeowners and private clients, the CIS rules are less relevant and sole trader status works well.

Registering with HMRC

You must register for Self Assessment with HMRC within three months of starting your business. You will receive a UTR (Unique Taxpayer Reference) by post.

CIS Registration

If you work as a subcontractor, you should register with CIS. Without registration, contractors must deduct 30% from your payments. With registration, the deduction drops to 20%. If you meet certain turnover and compliance criteria, you can apply for gross payment status and receive payments without deductions.

If you engage subcontractors yourself, you must register as a contractor with CIS. You are then responsible for verifying your subcontractors with HMRC, making the correct deductions, and filing monthly CIS returns.

VAT Registration

VAT registration is compulsory when your turnover exceeds £90,000. Many builders hit this threshold quickly. Be aware of the VAT domestic reverse charge for construction services, which applies to most building work supplied between VAT-registered businesses in the CIS chain. Under the reverse charge, you do not charge VAT to your customer — instead, they account for it themselves.

This does not apply to work for end consumers (homeowners), only to supplies between businesses within the CIS chain.

Insurance

Insurance is critical in construction:

• Public liability insurance — essential. Covers damage to third-party property and injury to members of the public. Most clients and main contractors require a minimum of £1 million, often £5 million.
• Employers' liability insurance — legally required if you employ anyone, including casual labour. Minimum £5 million cover.
• Professional indemnity insurance — important if you provide design or advisory services
• Contractor's all-risks insurance — covers the works, materials, and temporary structures on site
• Tools and equipment insurance — covers your tools against theft or damage
• Vehicle insurance — commercial vehicle cover for your van

Expect to pay £500–£2,000 per year for a comprehensive package, depending on your turnover and the number of employees.

Claimable Expenses

Builders can claim a wide range of expenses:

• Materials — timber, bricks, cement, plasterboard, fixings, and all other building materials for jobs
• Tool purchases and repairs — hand tools, power tools, safety equipment
• Vehicle costs — fuel, insurance, maintenance, or mileage at 45p per mile
• Plant hire — scaffolding, skips, mini diggers, and other hired equipment
• Subcontractor payments — fees paid to subcontractors (less CIS deductions)
• Insurance premiums
• Workwear and PPE — safety boots, hard hats, hi-vis, and branded workwear
• CSCS card and training costs
• Phone and communications
• Waste disposal and skip hire
• Accountancy fees
• Marketing — website, signage, van livery
• Home office costs — if you run the admin side from home

Track everything from day one. Accounted handles CIS deductions, matches receipts to transactions, and keeps your records organised — even when you are on site.

CIS — What You Need to Know

The Construction Industry Scheme is one of the most misunderstood parts of running a building business. Here are the key points:

• Contractors (businesses that pay subcontractors for construction work) must register with HMRC and deduct tax from payments to subcontractors
• Subcontractors have deductions taken at 20% (registered) or 30% (unregistered) on the labour portion of each payment
• Materials are excluded — deductions are only made on the labour element. Always separate labour and materials on your invoices.
• Monthly returns — contractors must file monthly CIS returns with HMRC by the 19th of each month
• CIS deductions are not a separate tax — they are advance payments of your Income Tax and National Insurance. They are offset against your tax bill when you file your Self Assessment.

If you both hire subcontractors and work as a subcontractor yourself, you need to be registered as both a contractor and a subcontractor.

Health and Safety

As a self-employed builder, you have legal responsibilities under the Health and Safety at Work Act 1974 and the Construction (Design and Management) Regulations 2015 (CDM):

• Carry out risk assessments for every job
• Provide appropriate PPE
• Ensure safe working practices
• Report accidents under RIDDOR if required
• If you employ others, you must provide health and safety training

Failure to comply can result in enforcement action, fines, and in serious cases, criminal prosecution.

Bookkeeping Tips

Construction finances can be complicated — CIS deductions, VAT reverse charges, materials costs, and subcontractor payments all need careful tracking:

• Separate business and personal bank accounts — essential
• Record all CIS deductions received — you will need these to offset against your tax
• Keep materials and labour separate on invoices — this affects your CIS deductions
• Track subcontractor payments and deductions carefully
• Reconcile your bank account weekly
• Set aside money for tax — even with CIS deductions, you may still owe additional tax

Accounted is built for UK sole traders and understands CIS. It tracks your deductions, categorises expenses, and keeps everything ready for your tax return.

Key Deadlines

• 19th of each month — CIS monthly return (if you are a contractor)
• 31 January — Self Assessment tax return and payment
• 31 July — second payment on account
• Quarterly — VAT returns if registered

Getting Started

Starting a building business is straightforward if you get the basics right. Register with HMRC and CIS, get proper insurance, keep clean records, and separate your materials from your labour on every invoice.

Ready to take control of your building business finances? Sign up for Accounted and let Penny track your CIS deductions, expenses, and tax obligations — so you can focus on the job.