Key Takeaways You pay Income Tax and Class 4 National Insurance on your profit — your income after allowable expenses — not on your turnover. For 2026/27 the rates are 20% income tax and 6% Class 4 NI on profit between £12,570 and £50,270, rising to 40% and 2% above that. The 20% CIS deducted from your pay is not your final tax — it's an advance, and it's usually more than you actually owe, so subcontractors are often due a refund. Class 2 NI is no longer a bill for most subc

Key Takeaways Employment status is decided by the reality of the working relationship, not by the wording of a contract or by how someone invoices you. The three core tests are control, personal service (substitution), and mutuality of obligation — no single factor decides it on its own. CIS registration does not make someone self-employed. Contractors must assess each subcontractor's employment status separately, and paying someone through CIS is not evidence of self-employm

Key Takeaways Construction work falls into four VAT categories: standard rate (20%), reduced rate (5%), zero rate (0%), and exempt. Most work on existing buildings is standard-rated at 20% — repairs, extensions, loft conversions, and general renovation. New-build residential construction is zero-rated (0%), while qualifying conversions and properties empty for two or more years attract the 5% reduced rate. Zero-rated is not the same as exempt: zero-rated work is still taxable

Key Takeaways Under the VAT domestic reverse charge (DRC), a VAT-registered subcontractor doesn't charge VAT to a VAT-registered contractor — the customer accounts for the VAT instead. It applies where both parties are VAT and CIS registered, the payment is reported under CIS, and the work is standard (20%) or reduced (5%) rated. Zero-rated work is excluded. The reverse charge is the default: it applies unless your customer tells you in writing that they're an end user or int

Key Takeaways Allowable expenses are the business costs you can deduct from your income before tax — and claiming them in full is what turns overpaid CIS into a refund. To count, a cost must be "wholly and exclusively" for your business — for mixed personal-and-business costs, you claim only the business share. Common claims for subbies include tools, protective clothing, vehicle and mileage costs, insurance, phone, materials, use of home, and professional fees. The simplifie

Key Takeaways Subcontractors don't have to register for CIS, but if they don't, contractors must deduct 30% instead of 20% — so registering is almost always worth it. Contractors must register before making their first payment to a subcontractor; even a single payment triggers the requirement. You need a Unique Taxpayer Reference (UTR) and a Government Gateway account to register. No UTR yet? Register for Self Assessment first — it can arrive by post in around 10 working days

The size of your refund is driven mainly by claiming every allowable expense — not by your rate. Consult a construction-industry specialist accountant to ensure you get the highest possible refund.