Specialist Accountants for Construction & Builders

CIS is HMRC's tax deduction scheme for construction work. Contractors must deduct tax from subcontractor payments at 20% (if the subcontractor is CIS-registered), 30% (if not registered/verified), or 0% (if the subcontractor has gross payment status). Contractors must verify subcontractors with HMRC before first payment, file monthly CIS returns by the 19th of each month, and provide subcontractors with CIS deduction statements. Subcontractors can offset CIS deductions against their own tax liabilities. We handle the entire CIS process. Explore CIS & payroll services.

From 1 March 2021, the VAT domestic reverse charge applies to most B2B supplies of construction services under CIS. Instead of the supplier charging and collecting VAT, the customer accounts for both the input and output VAT on their own VAT return. This applies to standard and reduced-rated supplies between VAT-registered CIS contractors and subcontractors. Key exceptions: services to end users (property owners, not contractors), and intermediary suppliers who are connected to end users. We ensure your invoices and VAT returns correctly apply the reverse charge rules. Learn about VAT services.

To qualify for gross payment status (0% CIS deduction), you must pass three HMRC tests: the business test (your business is a construction business run through a bank account), the turnover test (excluding VAT and materials, your construction turnover must be at least £30,000 per director/partner, or £100,000 for the business overall in the 12 months before application), and the compliance test (all tax returns and payments must be up to date for the past 12 months). We help prepare your application and ensure you meet all requirements. View company formation services.

Retentions are amounts held back from payments as security against defects — typically 3-5% of contract value, released after the defects liability period (6-12 months). For contractors, retentions receivable are included in trade debtors on the balance sheet. For subcontractors, retentions payable are included in trade creditors. Under FRS 102, retentions should be recognised as revenue when the work is completed, not when the retention is released. We ensure correct treatment for both CIS and VAT purposes. See annual accounts services.

Self-employed builders can claim: materials and consumables, tools and equipment (replacement or capital allowances on larger items), workwear and PPE (hard hats, boots, hi-vis), van and vehicle expenses (mileage or actual costs), fuel, plant and machinery hire, subcontractor costs, insurance (public liability, tools), professional fees (CSCS cards, training), home office costs, mobile phone, advertising, and bank charges. We ensure you claim every allowable construction-specific expense. View self assessment services.

For higher-earning construction subcontractors (above approximately £50,000 profit), a limited company is often more tax-efficient — you can extract profits via salary and dividends, claim CIS suffered against your company's tax liabilities, and benefit from limited liability. Many main contractors prefer or require subcontractors to be limited companies. Sole trader status is simpler and may suit lower-earning tradespeople. We analyse your specific earnings, contract requirements, and CIS position to advise on the optimal structure. Explore limited company services.