Accounting for builders and construction trades
Builders often sit on both sides of CIS: paid as a subcontractor on one job and paying subcontractors on the next. Taxmo records both the income side and, when you take on subcontractors, the CIS payments and monthly returns.
What Taxmo does for builders
Income and expenses in one place
Record what you earn and spend in categories, and see your profit and what to set aside for tax as you go. On every plan.
CIS, when you pay subcontractors
Keep subcontractors and their verification status on file, record payments with the deduction worked out, and have each month's return added up for you to file. On Starter and Pro.
Invoices and quotes
Send quotes and invoices from the same records, and see which invoices are still unpaid. A few a month on Free, without a cap on Starter and Pro.
Reverse charge invoices
Mark an invoice line as reverse charge and the invoice shows the rate, charges no VAT and states that your customer accounts for it.
Receipt scanning
Photograph a receipt or forward it on WhatsApp, and Taxmo reads it into an expense for you to check. On Starter and Pro.
Connect your bank
Connect your bank read-only or upload a CSV statement. Each transaction waits for your approval before it counts. On Starter and Pro.
VAT returns, once you are registered
Taxmo works out the nine boxes from your approved entries, shows where each figure comes from and files the return to HMRC over Making Tax Digital. On Starter and Pro.
Capital allowances
Keep a register of the assets you claim capital allowances on, with the annual investment allowance and writing down allowances worked out for each. On Pro.
Expenses builders commonly claim
Materials
Raw materials and the direct costs of the work you sell. Anything bought for private use is not allowable. Source: https://www.gov.uk/expenses-if-youre-self-employed/reselling-goods
Subcontractors and staff
Payments to subcontractors and staff costs such as salaries and employer's National Insurance. Source: https://www.gov.uk/expenses-if-youre-self-employed/staff
Equipment you keep
Equipment you keep and use in the business is claimed as an allowable expense if you use cash basis accounting, or through capital allowances if you use traditional accounting. Source: https://www.gov.uk/expenses-if-youre-self-employed/office-property
Van running costs
Fuel, insurance, repairs and servicing, vehicle tax, breakdown cover and parking for business journeys. Or use the flat mileage rate instead of actual costs, unless you have already claimed capital allowances on the vehicle. Source: https://www.gov.uk/expenses-if-youre-self-employed/travel
Protective clothing
Protective clothing your work needs, such as safety boots or hard hats, and overalls that protect your own clothes. Everyday clothing is not allowable, even if you only wear it for work. Source: https://www.gov.uk/expenses-if-youre-self-employed/clothing
Business insurance
Any insurance policy for the business, for example public liability insurance. Source: https://www.gov.uk/expenses-if-youre-self-employed/legal-financial
Rules worth knowing
The Construction Industry Scheme
If you work for a contractor in construction, you may need to register for CIS as a subcontractor. The contractor takes a deduction from each payment and passes it to HMRC as an advance payment towards your tax and National Insurance. Registering means a lower deduction than not registering, and some subcontractors can apply for gross payment status. Source: https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor
When you pay subcontractors
If you pay subcontractors for construction work you are a contractor under CIS, with your own registration, checks that your subcontractors are registered, deductions and monthly returns. The monthly return dates are on our UK tax deadlines page. Source: https://www.gov.uk/what-you-must-do-as-a-cis-contractor
VAT domestic reverse charge
If you are VAT-registered, most building and construction services between VAT-registered businesses that are reported under CIS use the domestic reverse charge: your customer accounts for the VAT instead of paying it to you. Some services supplied on their own are excluded, so check the list on GOV.UK. Source: https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services
Current figures, each with its GOV.UK source, are at UK tax rates.
Common questions
Can I claim what I pay my subcontractors?
Yes, subcontractor costs are an allowable staff expense. If CIS applies you also deduct from their payments and report them to HMRC each month.
Does Taxmo file my CIS return?
No. Taxmo adds up each month's payments and deductions into a return for you to file with HMRC, and you mark it as submitted once you have.
Can I use the trading allowance and claim expenses?
No. The trading allowance is a tax-free amount of trading income each year, and if you use it you cannot also claim expenses or capital allowances. Check the current amount on GOV.UK or on our UK tax rates page.
General information from GOV.UK guidance, not tax advice. Rules and figures change, so verify on GOV.UK using the links on this page before relying on them.