What can a self-employed builder claim?
Blocks and timber, the kitchen you charge on, skip and digger hire, scaffold, the tools in the van, the trades you pay and the insurance that gets you on a job all come off your profit before tax. Here is how a deposit lands in a tax year, what CIS leaves alone when a contractor pays you, why the VAT threshold arrives early for a builder, and a worked year that ends with a bill.
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What a self-employed builder can claim
Materials you build in and charge on
Blocks and bricks, timber and sheet materials, insulation, membrane, screed, cement and aggregates, fixings by the box, and the kitchen or bathroom suite a customer asks you to supply. Everything that stays in the building is Goods for resale, the box HMRC labels goods used. Mark-up or not, the whole invoice including the materials is your turnover, and the merchant bill is the expense set against it. Materials the homeowner orders and pays for themselves never touch your books.
Skips, diggers and scaffold
A skip for the strip-out and another for the muck-away, a mini digger and dumper for the footings with no driver supplied, a mixer, a breaker and acrow props are all hire charges, recorded as Other expenses with their delivery and collection fees, and a welfare unit or site toilet on a longer job goes with them. Scaffolding is different once someone puts it up: a scaffolding firm that erects and strikes it, or a digger hired with its operator, is doing construction work for you, so you deduct CIS from the labour and the payment goes in Construction industry - payments to subcontractors. Buy a digger or a mixer outright instead and it becomes equipment, below.
Tools and the equipment you own
Drills, saws, nail guns, a laser level, a mixer or a compactor plate you buy rather than hire, trestles, ladders and the tower in the lock-up are equipment, and FileThat's box for equipment is Repairs and maintenance. The cash basis deducts the full price in the tax year it is paid for, with no spreading over years, so a £2,000 plant purchase in a busy year is a £2,000 deduction in that year. Getting a broken tool repaired goes in the same box.
Gloves, blades and what gets used up
Safety boots, a hard hat, hi-vis, gloves, dust masks and ear defenders protect you, so they are allowable, and so are the things a job eats: cutting discs, saw blades, drill bits, silicone and foam, cable ties, tarpaulins and the sacks for rubble. Record protective gear and consumables as Other expenses. Washing the overalls counts too.
The trades you bring in
An extension needs an electrician, a plumber and a plasterer, and when they are self-employed and you pay them, their gross pay before any CIS you took off goes in Construction industry - payments to subcontractors. Paying another trade for construction work makes you a contractor under the scheme, with the deductions and monthly returns that come with it. A labourer on your payroll is different: their pay is Wages and salaries.
Insurance, cards and finding the next job
Public liability is the first thing a contractor and most homeowners ask for, and contractor's all risks covers the half-built extension if it floods or burns; both go in Insurance, along with cover for the tools. Your website, the board outside a job, van livery and a listing on a trade directory are Advertising costs. Renewing your CSCS card is allowable too, in Other expenses, and so are the accountant's fee and the part of your mobile bill that is for work.
The rules behind every claim: allowable expenses for sole traders.
The van between sites and the merchant
A builder's van carries the tools to the job, the materials from the merchant and the rubble to the tip, so a good part of the year's cost sits in it. Claim it one of two ways and keep that way for as long as you run the van: HMRC's flat mileage rates, 55p a mile for the first 10,000 business miles in the tax year and 25p after that, or the business share of what it really costs to run, diesel, insurance, servicing, tyres and repairs, recorded as Motor and fuel. The price of a van bought outright can, on the cash basis, be deducted in the year it is paid for, less any private share, and a van deducted that way can never go on the flat rate afterwards; a car cannot be deducted in one go like that.
An extension here for eight weeks, a loft conversion there for ten, a run of smaller repairs in between: driving from home to each of those is business travel when the trade is run from home, as it usually is, and the merchant run and the tip run on the way count with it. The caution is the single long job. A year fitting out one commercial unit for one client can be treated as where the business is carried on, and the daily drive to it as ordinary commuting rather than a business journey.
Record each trip with the date, where you went and the miles. FileThat prices a mileage entry at the flat rates, and running costs entered with a business-use percentage are filed at the business share.
The van and car rules in detail, and the journeys that qualify: can I claim mileage.
CIS and VAT
Building for a contractor is CIS
Extensions, alterations and repairs to a building are construction operations, so when a main contractor, a developer or another builder pays you for them, they take 20% off your labour, or 30% if you are not registered, and never off materials. Plant you hire in for the job is left out of the deduction too, unlike plant you own. Your income is the gross figure before anything was taken, and you enter the figures from each monthly statement the contractor gives you in FileThat so the tax already paid comes off your bill.
Show the materials, or the contractor estimates them
The contractor deducts only on the balance once the materials you bought yourself come off, and that depends on your invoice. Put the labour on one line and the materials on another, at what they cost you, and keep the merchant invoices in case they ask. Leave the split off and the contractor is entitled to estimate your materials and deduct on everything else, which tends to mean more tax taken than the job warranted. It comes back when you file, but not before.
Homeowners pay you in full
A private householder having their own home extended or repaired is never a contractor under the scheme, however big the job, so nothing is deducted and the tax on that income is settled through your return. The same goes for most businesses outside construction, a shop having its back room converted for instance, unless it has spent more than £3 million on construction in any 12 months. Because a builder's year usually mixes both, keep the CIS income and the private income apart in your records so the statements reconcile.
VAT: the threshold comes early for a builder
You must register for VAT once your taxable turnover in a rolling 12 months passes £90,000. Taxable turnover is everything you invoice, materials included, so a builder who buys the blocks and the kitchen and charges them on gets there on far less labour than a labour-only trade: £50,000 of labour plus £45,000 of materials charged on is over the line. Once registered, a job for a contractor who is also VAT registered and pays you under CIS normally comes under the domestic reverse charge: they account for the VAT, not you, and in FileThat the sale is recorded as Construction industry - reverse charge sales. A homeowner is charged VAT in the ordinary way.
See what you could get back: the CIS refund calculator.
A builder's year: extensions, one contractor, and a bill to pay
Take a builder in England whose 2026-27 is mostly homeowner work: three extensions and a run of repairs bringing in £62,000 received during the year, £26,000 of which is materials bought and charged on at cost. That figure includes a £5,000 deposit paid on 20 March 2027 for a job that starts in April; under the cash basis it is income when it arrives, so it belongs to 2026-27. Alongside that they do a shop fit-out for a main contractor, invoiced as £18,000 of labour and £4,000 of materials. The contractor deducts 20% of the labour, £3,600, and pays £18,400. Turnover for the year is £84,000, within £6,000 of the VAT threshold, so the rolling 12-month total needs watching every month.
Costs: £30,400 of materials (the £30,000 charged on plus £400 of fixings and sundries absorbed in the price); £9,000 to a self-employed electrician and plasterer, the full amount before the builder deducted 20%, £1,800, and paid it over to HMRC; £4,800 of skip, mini digger and mixer hire; £1,400 of tools; £650 of boots, gloves, blades and consumables; £900 of insurance; £350 on the website and van livery; 7,000 miles between sites, the merchant and the tip at the flat rate (£3,850); £300 of the mobile bill; and £400 for the accountant. Total £52,050, leaving a profit of £31,950.
The Personal Allowance covers £12,570, leaving £19,380 taxable. Income Tax at 20% on that is £3,876, and Class 4 National Insurance at 6% adds £1,162.80, so the year costs £5,038.80. The contractor's £3,600 is already with HMRC, which leaves £1,438.80 to pay by 31 January 2028. Because that is £1,000 or more and CIS covered less than 80% of the year's tax, two payments on account of £719.40 each towards 2027-28 fall due as well, one with it and one the following July. The £1,800 taken from the electrician and plasterer is their tax, not the builder's, and plays no part in this sum.
Had the £22,000 contractor job been billed as a single figure with no materials line, the deduction would have been 20% of all of it, £4,400, and the January balance would have been £638.80 rather than £1,438.80, and with more than 80% of the tax taken at source there would be no payments on account: the same tax either way, but £800 more of it held by HMRC from the day each payment was made. Had the builder recorded none of the £52,050 in costs, tax and National Insurance on an £84,000 profit would have come to £23,968.60. A Scottish taxpayer is on Scotland's Income Tax rates, so the result north of the border is a little different.
What you cannot claim
Combats and a hoodie on site
The boots, the hi-vis and the hard hat are protective, so they count. The combat trousers, hoodie and trainers under them are clothes you could wear anywhere, and the tax rules treat them as private even when a job wrecks them.
Coffee and a roll on the way to site
Breakfast from the garage on the drive to a local extension is food you would have bought regardless, so it is a private cost. Meals become allowable only when the work takes you out of your usual pattern, such as a contract far enough away to stay over.
Your own extension
Materials and hire for work on your own house, or a job for a relative that you are not paid for, are private however they were bought. Put them through the records as disallowable and the profit stays right.
Fines, drawings, and the tax itself
A parking ticket outside a job, a speeding fine in the van, interest charged on tax paid late, and the money you draw to live on are not expenses of the business, and nor are the Income Tax and Class 4 charged on the profit.
The detail behind each: boots, hi-vis and everyday clothes, food on a job and the van, parking and fines.
Straight answers
A customer paid a deposit in March for a job starting in April. Which tax year is it?
The year you received it. On the cash basis, the default for sole traders, income is counted on the day the money reaches you, not when the work is done or the invoice is dated, so a deposit banked on 20 March 2027 is 2026-27 income even though the work starts in April. The same rule works in your favour on the other side: a stage payment the customer has not yet paid, or a retention held back until the snagging is signed off, is not income until it is actually paid.
Can I claim the van I bought this year?
Yes. A van bought and paid for in the year can, on the cash basis, be deducted as an expense, in full if it is used only for the business or less a share for any private use, which in a good year can wipe out a large slice of the profit. The trade-off is permanent for that van: once its price has been deducted you claim only the business share of what it costs to run, and never the flat mileage rate. If the van cost more than the year's profit, the loss can be set against your other income or carried forward to later profits, so a big purchase is not wasted. A car is not deducted this way.
Do I pay CIS on the digger I hired for the job?
Not if you hired it from a plant hire firm. Plant hired from a third party for the job comes off the payment before the contractor works out the 20%, in the same way as materials you paid for directly, so show the hire charge on your invoice and keep the hire receipt behind it. Plant you own is the opposite: no notional hire charge can be taken off for the mixer or the breaker in your van, because only what you actually paid out counts. The fuel you put in plant, hired or owned, counts as materials.
When does a builder have to register for VAT?
When your taxable turnover in the previous 12 months, counted on a rolling basis rather than by tax year, goes over £90,000, or when you expect it to pass that in the next 30 days alone. Materials you buy and charge to the customer are part of your turnover, as is the gross amount a contractor pays before CIS, so a builder supplying the kit for extensions can cross the line on a labour income well under £50,000. Check the running total at the end of every month; you have 30 days from the end of the month you crossed it to register.
My customer bought the kitchen and the bathroom suite themselves. Is that my income?
No. If the homeowner orders and pays the supplier directly, the money never passes through your business, so it is neither your turnover nor your expense, and it does not count towards the VAT threshold or Making Tax Digital either. Only what the customer pays you is income, and only what you paid out is an expense. If you order the kitchen on your trade account and the customer repays you, both sides go through your books, even at cost with no mark-up.
I pay an electrician and a plasterer on my extensions. What does that make me?
A contractor under CIS, as well as a subcontractor whenever a main contractor pays you. That means registering with HMRC as a contractor before the first payment, checking each person's status, taking 20% or 30% off their labour and paying it over with a monthly return. The gross amount you pay them is your expense, in Construction industry - payments to subcontractors, and the monthly return is made through HMRC's CIS online service or by your accountant, not through FileThat.
Do self-employed builders have to use Making Tax Digital?
If your qualifying income is over the threshold, yes. It has been £50,000 since 6 April 2026, and falls to £30,000 from April 2027 and £20,000 from April 2028. HMRC decides using the turnover on an earlier year's return, so a year like the worked example above brings a builder in from a later April, not straight away. Qualifying income is turnover before any expense, so the £30,000 of materials charged on and the gross £22,000 from the contractor all count, which can bring a builder who supplies materials over a threshold well before their labour alone would.
Keep every claim, file it with HMRC
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