Accountants for UK tradespeople CIS, VAT reverse charge, MTD ITSA & van expenses.

Trades we work with

Trade businesses are the UK's small-business backbone: electricians (sole-trader domestic spark or limited-company commercial contractor), plumbers and heating engineers (Gas Safe-registered, often with VAT and one or two improvers), builders and groundworkers (CIS contractors with subcontractors of their own), carpenters and joiners, decorators and painters, roofers and scaffolders, gardeners and landscapers (often blending labour with materials sales), tilers and bathroom fitters, kitchen fitters, and property maintenance generalists. The technical issues are remarkably consistent across these trades: CIS in one form or another, the VAT decision (cash-flow vs paperwork), van and tools tax relief, and the sole-trader-vs-limited-company question. These are the practical questions we work through with trade clients.

The Construction Industry Scheme — what actually matters

CIS catches almost every trade involved in building, alteration, repair or demolition. If you do the work as a subcontractor for a contractor, your payments are subject to a deduction at source — 20% if you're verified, 30% if you're not, 0% if you hold gross payment status. The deduction isn't a tax in itself; it's a payment on account against your year-end tax bill. Get the verification right and the system works in your favour. Get it wrong and you're either lending money to HMRC interest-free for 12 months or scrambling to register mid-job.

If you take on subcontractors you become the contractor. That means filing CIS300 returns monthly by the 19th, verifying every new subcontractor with HMRC before paying them, applying the right deduction rate, and giving each one a payment and deduction statement. Late CIS300 filings cost £100 immediately, escalate hard, and don't go away. We handle all of this for clients on the Limited Co Growth tier and above.

Gross payment status — worth applying for?

Yes, for almost any trade business above £30k turnover that bills VAT-registered contractors. Gross payment status means you receive the full payment without the 20% CIS deduction — the cash flow difference is significant. To qualify, HMRC tests three things: (1) the business test — you have a genuine UK construction business with proper bank account and records; (2) the turnover test — net construction turnover above £30,000 (sole trader/partner per partner, or £100,000 for limited companies with multiple directors); and (3) the compliance test — tax, NIC, VAT and CIS all up to date for the last 12 months. The compliance test is where most applications fail. We do the application, evidence the compliance history, and handle the annual renewal check — we don't let small late-filings cost you the status.

Domestic Reverse Charge VAT — the rule that catches most trades out

Since 1 March 2021, most construction services between VAT-registered businesses operate under the Domestic Reverse Charge (DRC). Instead of you charging VAT on your invoice and collecting it, the customer accounts for both the output VAT and the recoverable input VAT on their own return. The cash flow effect on you is real: you stop receiving the 20% VAT amount alongside your fee, so your gross cash inflow drops by a sixth even though your profit hasn't changed.

The reverse charge applies when all five of these are true: (1) the supply is a CIS-specified service (most construction work, see CIS 340 for the definitive list); (2) both parties are VAT-registered in the UK; (3) both parties are CIS-registered; (4) the customer is not the end user; and (5) the supply is standard or reduced-rated (not zero-rated like new-build housing). If any one of these fails, you charge VAT normally.

Your invoice must make the reverse charge clear. HMRC accepts any one of three wordings:

• "Reverse charge: VAT Act 1994 Section 55A applies"
• "Reverse charge: S55A VATA 94 applies"
• "Reverse charge: Customer to pay the VAT to HMRC"

You still show the VAT rate (20% or 5%) and the VAT amount the customer must account for, but you don't charge it. On your VAT return, the sale goes into Box 6 (net only) and nothing in Box 1. For your customer, they put the VAT into Boxes 1 and 3, and recover it in Box 4 if it's a normal taxable supply. The result is tax-neutral for the customer but cash-significant for you. If the reverse charge means you're routinely owed VAT refunds, you can apply to switch to monthly returns to speed up the cash back.

End user declarations — ask for them in writing

If the customer claims to be the end user (e.g. a landlord doing maintenance on their own property, a developer whose end customer is the public), the reverse charge doesn't apply and you charge VAT normally. Get the end user declaration in writing — a letter, email, or contract clause — or HMRC's default assumption is that they're not an end user. We can provide a one-page template to collect end-user declarations as part of standard job onboarding.

Making Tax Digital for Income Tax — April 2026 onwards

MTD ITSA changes how self-employed tradespeople report income to HMRC. From 6 April 2026, if your combined gross self-employment + rental income tops £50,000, you're in scope: digital records of every transaction, quarterly summary updates to HMRC, plus a final declaration at year-end. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. That second drop is what catches most jobbing sole-trader trades — very few earn under £20k after expenses.

The good news: the underlying tax bill doesn't change — this is reporting, not new tax. The practical news: paper records are no longer enough. You need MTD-compatible software (FreeAgent, Xero or QuickBooks all qualify; FreeAgent is free if you bank with NatWest, RBS, Ulster Bank or Mettle). Once we set it up — bank feed, CIS handling, mileage tracker — the quarterly submissions take under an hour each. We do the setup as part of onboarding and handle the submissions on your behalf going forward.

Van, tools, materials and mileage — what you can actually claim

This is where most trades who do their own tax leave money on the table. Here's the honest picture for 2026/27:

The van

If you bought the van outright and it's used substantially for business, you can claim capital allowances on the purchase price. Most trade vans qualify for the Annual Investment Allowance (100% in year of purchase up to the £1m AIA cap). If business use is mixed with private, you restrict the claim by the private-use percentage. If you're financing the van on hire purchase, you claim capital allowances on the cash price plus deduct the finance interest as a running cost. If it's on contract hire, you deduct the lease payments instead — usually simpler but no asset on your books.

Running costs — fuel, insurance, MOT, servicing, repairs, road tax — all allowable in proportion to business use. For typical jobbing trades doing 80%+ business mileage, that's most of the cost. Personal use (school run, weekend trips) reduces the claim proportionally — HMRC expects an honest split, not a 100% claim on a vehicle that's clearly the family runabout too.

Tools, plant and equipment

All deductible. Power tools, hand tools, ladders, generators, drain cameras, MFTs (multi-function testers) for electricians, compressors, scaffolding — if it's used for the work, it's claimable. Items expected to last more than two years technically qualify for capital allowances; in practice the Annual Investment Allowance covers virtually all trade tool spending. Keep receipts. HMRC's audit pattern on trades is to ask for supplier invoices for big-ticket items.

Materials

Allowable when used on jobs that you've also invoiced. If you buy materials and recharge them to the customer at cost, both sides go through the books. If you mark up the materials, the mark-up is taxable profit. Stock at year-end — materials you've bought but not yet used — should be carried on the balance sheet as inventory rather than deducted in the year of purchase. We handle the year-end adjustment so your figures stand up.

Safety gear, PPE and certifications

All allowable. PPE (helmets, safety boots, hi-vis, gloves), ECS / CSCS / Gas Safe / NICEIC card fees, CPD courses, public liability insurance, employer's liability if you have staff — every one of these is a legitimate business cost.

Travel, mileage and site costs

Site travel (between your base and the job, and between jobs in the same day) is fully allowable. The commute from home to a regular workplace is not — but most trades don't have a "regular workplace" in the HMRC sense; you have a series of temporary workplaces, and travel between them is allowable. Choose mileage method or actual costs on the van, not both. Mileage method is 45p/mile for the first 10,000 business miles in the tax year, 25p/mile thereafter — simpler, but only worth it if you don't have a van you're depreciating. Most trades with their own van use actual costs because the capital allowances on the van are worth more than the mileage simplification.

Subsistence and food

Food and drink on the job are not allowable for sole traders — HMRC's view is everyone needs to eat. Limited exception: where you're working away from your normal area with an overnight stay, reasonable subsistence is allowable. The "normal area" test is genuinely subjective — if you're a local sparky doing a job 90 minutes away with a hotel stay, that lunch is allowable. If you're picking up a coffee on the way to a job five miles from home, it isn't.

Sole trader or limited company — what works for trades?

The honest answer for 2026/27: the tax case for incorporating has narrowed substantially. Dividend tax rates rose by 2.75 percentage points across all bands from 6 April 2026, so combined Corporation Tax + dividend tax on extracted profits is now noticeably higher than it was before. Below around £30k of profit, sole trader is almost always cheaper. Between £30k and £60k, the gap is small and often outweighed by extra accountancy and Companies House costs. Above £60k profit, limited company saves modestly — only if you don't extract all the profit each year.

For trades specifically, the non-tax reasons often matter more than the maths:

• Limited liability matters where you face exposure that public liability insurance doesn't cover — commercial work, work on high-value properties, structural work where things can go wrong years later
• Contractor requirements — bigger contractors and main builders increasingly only engage Ltd Cos for subcontract work, partly for their own CIS compliance
• Gross payment status is available to both sole traders and Ltd Cos but the turnover threshold for Ltd Cos is higher (£100k vs £30k per partner)
• Family income-splitting — if a spouse genuinely contributes to the business (admin, quotes, bookkeeping), dividend payments can be tax-efficient
• Exit value — if you might ever sell the business, a limited company is the saleable vehicle

We model both scenarios on a 20-minute call. Bring your last full-year profit figure and we'll show you the numbers both ways. Honest answer, no upselling — if sole trader is cheaper, we'll say so.

What clients commonly leave on the table

Common patterns we look for when reviewing a trade business's existing tax setup:

• Capital allowances on the van — either not claimed at all because the trade did "mileage method", or under-claimed because AIA wasn't applied properly in year of purchase
• Phone and broadband at home — the business proportion is allowable, often 50–80% for a trade who does quoting and admin from home
• Use of home as office — the simplified flat rate (£10–£26/month) is rarely claimed even though almost every trade does quoting, invoicing and ordering from home
• Replacement tools deducted as repairs — tools genuinely consumed or stolen on site can be expensed in the year, not capitalised
• CIS deductions not reconciled — it's common for sole-trader subbies to miss thousands in CIS credit because the year-end Self Assessment didn't claim the deductions back properly
• VAT scheme not optimised — VAT Flat Rate Scheme can win for trades with low input VAT (mostly labour), but the 16.5% "limited cost trader" rate added in 2017 ruined it for trades who don't buy much in materials. We model both schemes
• Spouse on payroll without proper documentation — legitimate if the work is real and proportionate, but needs a contract and a paper trail

None of these alone is huge. Together they often add up to £1,000–£4,000 a year of legitimate tax saved for a typical trade business.

Our pricing for trades

Fixed monthly subscriptions, all + VAT, no surprise bills, monthly notice. Pick the tier that fits:

Above £750k turnover, complex group structures, or M&A work — we refer to our sister firm The Tax Lead, Chartered Certified Accountants and Tax Advisers based in the City of London.

How working with us actually goes

Step one is a free 20-minute call — honest read of whether we're a fit. If yes, within 24 hours we send a fixed monthly quote, engagement letter and onboarding checklist. We register as your HMRC agent (CIS, VAT, Self Assessment, PAYE as applicable), get your accounting software set up if you don't have one, and pick up a clean start date. If you're switching from another accountant, we send the professional clearance letter and chase your records on your behalf — you don't have the awkward conversation.

From there: monthly bookkeeping flows from your bank feed and receipt-capture app. Quarterly CIS300 returns and VAT returns go out automatically. MTD ITSA quarterly updates likewise. Year-end Self Assessment or annual accounts get prepared three to four months before deadline so we're never scrambling. Every set of accounts and every tax return is reviewed by a Chartered Certified Accountant and Chartered Tax Adviser before submission. If HMRC writes, we handle the response. You stay on the tools.