Fence Builders and Installers — CIS and Tax Guide

Fence building and installation is one of those trades that sits right on the boundary (no pun intended) between construction and landscaping — and that distinction matters when it comes to the Construction Industry Scheme (CIS). If you're a self-employed fence builder or installer in the UK, you need to understand not only your general tax obligations but also whether CIS applies to your work.

This guide covers the essentials: CIS registration, tax rates for 2025/26, allowable expenses, and practical tips for keeping your finances in order.

Does CIS Apply to Fence Builders?

The Construction Industry Scheme applies to work that falls within HMRC's definition of "construction operations." This includes installing fences, walls, and boundaries as part of construction projects. So if you're subcontracting to a builder, developer, or main contractor to erect fencing on a construction site or as part of a new build, CIS almost certainly applies.

However, if you're working directly for homeowners — putting up a garden fence for Mrs Jones next door, for example — CIS doesn't apply because the customer isn't a contractor within the scheme.

In practice, many fence builders do a mix of both: some work for contractors on larger projects (CIS applies) and some work directly for domestic customers (CIS doesn't apply). You need to understand the difference because it affects how you're paid and how much tax is deducted at source.

For a thorough overview, our CIS subcontractors guide covers the scheme in detail, and our CIS registration guide walks you through the sign-up process.

How CIS Deductions Work

When you work as a subcontractor under CIS, the contractor deducts tax from your payments before paying you. The rate depends on your CIS registration status:

• Registered with CIS: 20% deduction
• Not registered with CIS: 30% deduction
• Gross payment status: 0% deduction (you receive full payment and handle your own tax)

The deductions are essentially advance payments of your Income Tax and National Insurance. When you file your Self Assessment at the end of the year, the CIS deductions you've suffered are offset against your tax bill. If more has been deducted than you owe, you'll get a refund.

This is why registering for CIS is so important — the difference between a 20% and 30% deduction rate can significantly affect your cash flow throughout the year.

To qualify for gross payment status, you generally need to have been in business for at least 12 months, have met all your tax obligations on time, and have a turnover above a certain threshold (currently £30,000 per year, excluding materials). Gross payment status gives you the best cash flow position, but it comes with the responsibility of managing your own tax payments.

Income Tax and National Insurance

Regardless of whether CIS applies to some or all of your work, you pay Income Tax on your total taxable profits. For the 2025/26 tax year:

• Personal allowance: £12,570 (tax-free)
• Basic rate: 20% on profits between £12,570 and £50,270
• Higher rate: 40% on profits between £50,270 and £125,140
• Additional rate: 45% on profits above £125,140

National Insurance is charged on top: Class 2 at £3.45 per week on profits over £12,570, and Class 4 at 6% on profits between £12,570 and £50,270, then 2% above that. Our National Insurance guide for sole traders explains this fully.

If your turnover hits £90,000, you'll need to register for VAT. Many fence builders who work on larger projects for VAT-registered contractors choose to register voluntarily, as it allows them to reclaim VAT on materials and equipment. If your work falls under the domestic reverse charge for construction, the VAT rules are slightly different — check our VAT registration threshold guide for more.

Materials: What Counts Under CIS

One important area for fence builders is the treatment of materials under CIS. When a contractor pays you for fencing work, the payment is split into labour and materials. CIS deductions apply only to the labour element — materials are excluded.

This means you need to clearly break down your invoices:

• Labour: The cost of your time and skills — CIS deductions apply to this
• Materials: The cost of fence panels, posts, gravel boards, concrete, fixings, and any other materials you supply — CIS deductions do not apply

Getting this split right is crucial. If you don't separate materials on your invoices, the contractor may apply CIS deductions to the entire amount, leaving you out of pocket until you reclaim the overpayment through your Self Assessment.

Keep all your receipts for materials purchased for CIS jobs. If HMRC queries the split, you need to be able to prove what you spent on materials.

Allowable Expenses for Fence Builders

Beyond materials (which are a direct cost of the job rather than a general business expense), fence builders can claim a wide range of expenses:

Tools and equipment:

• Post hole diggers, augers, and post drivers
• Spirit levels, tape measures, and string lines
• Circular saws, jigsaws, and reciprocating saws
• Drills, impact drivers, and nail guns
• Concrete mixers (or hire costs)
• Safety equipment: hard hats, steel-toe boots, gloves, ear defenders, safety glasses
• Hi-vis clothing and workwear

Vehicle costs:

• Van running costs (fuel, insurance, road tax, maintenance) or simplified mileage at 45p per mile for the first 10,000 miles
• Van lease or hire purchase payments
• Vehicle signage and livery

Business overheads:

• Public liability insurance
• Professional indemnity insurance
• Employer's liability insurance (if you have employees)
• Accountancy and bookkeeping costs
• Phone and internet (business proportion)
• Business bank account charges
• Website and online advertising
• Trade body memberships

Working from home:

• If you do admin, quoting, and invoicing from home, you can claim a proportion of your household costs using either the simplified flat-rate method or the actual costs method

For the full picture on what you can and can't claim, see our complete list of sole trader expenses.

Record-Keeping for CIS and Tax

Fence builders who work under CIS have additional record-keeping requirements on top of the standard self-employment obligations. You need to keep:

• CIS payment and deduction statements from every contractor you work for — these are your proof of CIS deductions when you file your Self Assessment
• Invoices showing the labour and materials split for every CIS job
• Receipts for all materials purchased
• Records of all income, including work done directly for domestic customers outside CIS
• Expense receipts for tools, equipment, insurance, travel, and other business costs
• Mileage logs if you claim vehicle expenses using the simplified rate

HMRC can investigate CIS compliance, and they're particularly keen on checking that the labour/materials split is accurate. Good records are your best protection.

Accounted is built for UK sole traders and handles CIS income alongside regular self-employed earnings. Penny, our AI assistant, can help you categorise CIS and non-CIS income separately, track your deductions, and keep your records in order throughout the year — so you're not scrambling when Self Assessment time comes around.

Practical Financial Tips for Fence Builders

Understand your true tax position. If you're working under CIS, 20% is being deducted at source. But your actual tax rate might be higher or lower than that. If your profits are modest, you might be owed a refund. If your profits are higher, you might have more to pay. Don't assume the CIS deductions cover everything.

Keep CIS statements safe. You need these to claim credit for the tax already deducted. If you lose them, getting replacements from contractors can be a headache. Photograph or scan them as soon as you receive them and store them digitally.

Quote clearly. When quoting for jobs — especially CIS work — make sure your quotes clearly separate labour and materials. This avoids confusion and ensures deductions are applied correctly.

Set aside extra for non-CIS work. For jobs done directly for homeowners where no CIS deduction is made, you'll need to pay the full tax when your Self Assessment is due. Set aside 25-30% of the profit from these jobs into a savings account.

Plan for seasonal demand. Fencing work often picks up in spring and summer when homeowners are investing in their gardens, but it can slow down in winter. Plan your cash flow accordingly and use quieter periods to maintain equipment, update your marketing, and get your books in order.

Consider your business structure. Most fence builders start as sole traders, which is straightforward. But once your profits consistently exceed £40,000-£50,000, it may be worth exploring whether a limited company structure would be more tax-efficient. Speak to an accountant about your specific circumstances.

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Related reading:

• CIS for Subcontractors — The Complete Guide
• How to Register for CIS
• Sole Trader Expenses — The Complete List

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Accounted helps UK sole traders stay on top of their bookkeeping and tax. Start your free 30-day trial at getaccounted.co.uk.

Related Reading

• CIS Tax Refunds — How to Claim Back Overpaid Tax
• Builders and General Contractors — CIS and Tax Guide
• Mixed Contracts in CIS — When Some Work Is Excluded

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