Accountant for Construction and Trades UK Businesses
Most builders, plumbers, electricians and contractors did not start their business to spend their evenings on paperwork. They started to do the work. CIS verifications, monthly returns, Domestic Reverse Charge VAT, gross payment status, materials versus labour calculations — none of that built a single house. But get any one of them wrong and the penalties stack up fast, especially after the major CIS reforms that came into force on 6 April 2026.
NDCA is an ACCA-regulated accountancy practice working with UK construction firms, main contractors, subcontractors and self-employed trades, working primarily on Xero. We charge a fixed monthly fee, starting from £55/month, so your CIS returns, year-end and tax are managed every month — not scrambled for after a penalty letter arrives.
Contact us today for a free consultation to walk through your situation.
The CIS reforms that took effect in April 2026
The biggest shake-up of CIS in years. Since 6 April 2026:
- Nil returns are mandatory again. Contractors must file a CIS return every month, even if no subcontractors were paid. A late or missing return triggers a £100 fixed penalty, rising to £200 at two months, £300 (or 5% of the CIS due) at six months, and a further tax-geared penalty at twelve months.
- HMRC can revoke gross payment status immediately where a business “knew or should have known” it was party to a transaction connected to fraud — modelled on the existing VAT fraud rules. The wait to reapply has increased from one year to five.
- Penalties of up to 30% of lost tax apply to the business, its directors, and connected persons where the “knew or should have known” test is met. End users in the supply chain can also be made liable for the tax loss.
- Payments to local authorities and certain public bodies are now outside the scope of CIS.
For most contractors, the practical implication is sharper verification, tighter onboarding of new subcontractors, and a watertight monthly nil-return process. We handle the verification, the returns and the documentation as part of the monthly engagement so the compliance burden does not land on the office or the site.
The tax issues that catch construction firms out
Construction tax is its own ecosystem. CIS sits on top of VAT, sits on top of self assessment or corporation tax, and the three rules interact differently for every type of trade. The issues we see most often:
Wrong verification means the wrong deduction rate, and that hits cash flow every month. There are three CIS deduction rates: 0% for gross payment status, 20% for verified registered subcontractors, and 30% for unregistered or unverified ones — HMRC sets the rate, not the contractor. We verify every new subcontractor before their first payment and re-verify where required.
Since March 2021, most B2B construction supplies between VAT-registered CIS businesses fall under the Domestic Reverse Charge: the customer self-accounts for VAT instead of the supplier charging it. Getting this wrong on an invoice is a common, costly mistake — we set your invoice templates up correctly from the start.
CIS is deducted on labour only, not materials, and the split must be evidenced on every invoice or HMRC can treat the whole payment as labour (plant hire is excluded too). We make sure your invoice template, Xero setup and Apron capture all apply the same rules.
Gross payment status means no CIS deduction at source and is worth real money in cash flow, though it’s under closer scrutiny since the April 2026 reforms. Three tests apply — turnover, compliance and business — and we assess whether you qualify and handle the application.
The 3–5% a contractor withholds pending defect-free completion counts as income when invoiced, even though the cash lands months later — which can mean paying tax before you’ve been paid. We post retentions correctly in Xero, track their release, and factor them into cash flow forecasting.
CIS deductions are payments on account, not your final bill. Most sole-trader subcontractors are owed £1,000–£3,000+ a year once allowable expenses are counted; limited companies offset CIS through the Employer Payment Summary or claim a refund after year-end. We claim every penny you’re owed.
What can a construction worker claim as an allowable expense?
This is where most trades overpay tax. Allowable expenses are those incurred wholly and exclusively for the business — and in construction, there are more than most people realise.
Tools and equipment:
- Hand tools (drills, saws, chisels, levels, screwdrivers)
- Power tools (cordless, mains, battery replacements)
- Plant and machinery (mixers, generators, compressors)
- Ladders, scaffolding, access equipment
- Replacement and repair of tools
Protective clothing and PPE:
- Hi-vis jackets and vests
- Steel toe-cap boots and safety footwear
- Hard hats and safety helmets
- Gloves, knee pads, ear and eye protection
- Branded work clothing with a permanent business logo
Not allowable: ordinary clothing such as jeans, t-shirts, or trainers, even if only worn for work.
Vehicle and travel costs:
- HMRC simplified mileage at 45p per mile for the first 10,000 business miles, then 25p per mile after that
- Or actual running costs — fuel, insurance, repairs, road tax — apportioned to the business-use percentage
- Parking, tolls, congestion charges
- Public transport for genuine business journeys
Each vehicle is locked into one method (simplified or actual) and the method cannot be changed mid-life of that vehicle.
Materials and consumables:
- Building materials purchased for jobs (bricks, timber, cement, plaster)
- Fixings and fasteners (nails, screws, brackets)
- Adhesives, sealants, paint
- Site cleaning consumables
Subsistence and accommodation when working away from base:
- Overnight accommodation at temporary workplaces
- Evening meals when staying away overnight
- Subsistence at sites under the 24-month rule (you cannot be at a “temporary” site for more than 24 months)
Not allowable: routine meals at a regular site, or the price of a sandwich on a job you do every day.
Other allowable expenses:
- Public liability and tools insurance
- Trade body membership and professional fees
- Accountancy and bookkeeping fees
- Mobile phone and internet (business proportion)
- Use of home as office (HMRC simplified rate £10–£26 per month depending on hours worked)
- Marketing and advertising
- Subcontractor payments (correctly processed through CIS)
Capital allowances on bigger purchases:
- Annual Investment Allowance — 100% deduction on qualifying plant and machinery up to £1,000,000 per year
- Vans, tools and equipment over the immediate-expense threshold
- Full expensing for qualifying new assets bought by limited companies
The difference between the right and wrong expenses claim on a busy trade business can easily be £3,000–£8,000 of tax a year. We capture it all.
How Our Accountant for Construction and Trades UK Works With You
Three things make our service different for construction firms specifically.
- Fixed monthly fee
You pay one price every month for everything we agreed at the start — bookkeeping, monthly CIS returns, VAT, payroll, year-end, self assessment or corporation tax. No per-return charges, no clock-watching, no surprise invoices when a CIS deadline lands. Construction packages start from £55 per month, and we confirm your exact fixed fee before you join. - A real human, fast
You get a named accountant who knows your jobs, not a ticket queue. Most queries get a reply within one working day, which matters when a new subcontractor is starting on site tomorrow morning. - Built around how trades actually work
Construction does not run on a calendar. It runs on completion dates, stage payments, retentions, materials orders and a new subcontractor showing up at 7am on a Monday. We build the workflow around that, not around standard quarterly cycles.
The software we use: CIS tools, Xero and Apron
Most of our services run on Xero. CIS is one of the few exceptions.
Xero handles CIS well for straightforward setups — simple subcontractor lists, clean monthly cycles. For everyone else, dedicated CIS software is faster and more accurate on verification, returns and deduction statements, and we tell you which platform we’ll run your CIS on after the first call. You get the same fixed monthly fee either way, and your CIS data still flows back into Xero so bookkeeping, VAT and year-end stay connected.
For paperwork, subcontractors and suppliers send invoices to your dedicated Apron email address, and the supplier, date, amount, VAT and line items are extracted straight into Xero — materials and labour visible on every invoice, so the CIS deduction is calculated on the right figure first time.
Sorting out CIS or VAT on a project?
CIS deadlines and Domestic Reverse Charge rules do not pause for site days. Send us your situation — we will come back within one working day with a fixed monthly quote.
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Switching from another accountant
If you already have an accountant and you are not happy, switching is simpler than people think. We send your current accountant a professional clearance letter, collect your records, and pick up where they left off. Most construction clients are fully on-boarded within two weeks.
You do not need to wait for the next CIS month. You do not need an awkward phone call. As an accountant for construction and trades UK contractors trust, we handle it.
Construction industry FAQs
If you are a contractor in the construction industry, yes — you must register before making any payments to subcontractors. If you are a subcontractor, registration is voluntary, but unregistered subcontractors suffer a 30% deduction rate instead of 20%, which costs cash flow every month. Most subcontractors register.
Registered subcontractors verified by HMRC are deducted at 20% on the labour element of payments. Unregistered or unverified subcontractors are deducted at 30%. Subcontractors with gross payment status are paid in full with no deduction. The rate is set by HMRC at verification — contractors must apply the rate HMRC tells them to.
Three main changes took effect in April 2026: nil returns are mandatory when no subcontractors are paid in a month, the full late-filing penalty regime applies, and HMRC has powers to immediately revoke gross payment status where a business "knew or should have known" it was part of a fraudulent supply chain. The reapplication wait increased from one year to five years.
A status that lets a subcontractor receive payments without any CIS deduction at source. To qualify, you must pass a business test (minimum £30,000 net CIS turnover for sole traders, £30,000 per partner for partnerships, £30,000 for a company), a compliance test (every tax obligation up to date), and a 12-month compliance history check. We assess whether you qualify and handle the application.
A VAT rule that applies to most B2B construction supplies between VAT-registered businesses operating under CIS. The supplier does not charge VAT — the customer self-accounts for it on their own return. It does not apply to end users (homeowners, businesses that do not on-sell construction services) or to connected parties.
Yes. CIS is calculated on the labour element only. Genuine materials costs purchased by the subcontractor are excluded from the deduction base, provided they are listed separately and can be evidenced. Plant hire is also excluded.
Tools, power tools, plant, PPE and protective clothing, branded uniforms with a permanent business logo, mileage at 45p per mile (first 10,000) or 25p thereafter, materials, accommodation and subsistence when working away from base, public liability insurance, trade body membership, accountancy fees, mobile phone and internet (business proportion) and use of home as office. Ordinary clothing, routine meals at a regular site, and personal expenses are not allowable.
Yes. NDCA is regulated by the ACCA (Association of Chartered Certified Accountants).
We are remote first. We work with construction firms across the UK using Xero, so location does not matter.
Yes. Book one on 01903 968618 or via the contact form.
Ready to hand over CIS and tax?
Most construction clients hand over the records once and we handle everything from there — monthly CIS, VAT, year-end. Send us a few details — we will come back within one working day with a fixed monthly quote.
