by Asim Abbas
11 November 2026 
Tax guide for tradespeople: builders, electricians and plumbers
Tax guide for tradespeople: builders, electricians and plumbers
Whether you’re a builder, electrician, plumber, joiner or decorator, how you’re taxed depends on how you work: employed, self-employed, under CIS or through a limited company.
- Most trades work as sole traders, often under CIS
- Claim tools, van, materials and PPE
- Subcontractors often get a CIS refund
- MTD applies from £50,000, then £30,000
Tradespeople can claim a wide range of costs, from vans and tools to protective clothing and training, and many are owed CIS refunds each year.
This guide covers the key tax points for trades in 2026/27.
How you work matters
| Status | How you’re taxed |
|---|---|
| Employed | PAYE, with flat rate expenses for tools and clothing |
| Self-employed, domestic customers | Self Assessment on profits |
| Subcontractor under CIS | 20% or 30% deducted, then Self Assessment |
| Limited company | Corporation Tax, plus salary and dividends |
Expenses you can claim
- Tools and equipment, through the cash basis or capital allowances
- Van costs or mileage at 45p for the first 10,000 miles
- Materials bought for jobs
- Protective clothing, boots and branded workwear
- Public liability insurance and trade body fees
- Training, qualifications and certification, such as Gas Safe or NICEIC
- Phone, software and accountancy fees
CIS tax rebate calculator
Are you owed a refund?
Danny is a self-employed electrician. In 2026/27 he invoices £72,000, with £14,000 of materials, £6,500 of van costs, £2,400 of tools and £3,100 of other costs. His profit is £46,000. Income Tax is £6,686 and Class 4 NI is £2,005.80. If he worked under CIS and had £11,600 deducted from his labour, he would get £2,908.20 back.
CIS deductions and refunds
Contractors deduct 20% from the labour part of your invoices if you’re registered, or 30% if not. These deductions count towards your tax bill. Because they’re based on gross labour, not profit, many subcontractors overpay and get a refund after filing. Apply for gross payment status if you have enough turnover and a good compliance record.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179VAT for trades
Once your turnover passes £90,000 in any 12 months, you must register. Work for main contractors usually falls under the domestic reverse charge. Work for homeowners is charged VAT normally. See our reverse charge guide.
Making Tax Digital
Many tradespeople have gross income above £50,000, so they’re already in MTD for Income Tax from April 2026. The threshold falls to £30,000 from April 2027. Turnover counts, not profit.
Should you go limited?
With 2026/27 rates, most tradespeople extracting all their profit keep slightly more as sole traders. A company can still make sense with employees, retained profits or a need for limited liability. See our sole trader vs limited company guide.
See HMRC’s guidance on CIS, our CIS rebate calculator and our construction accountancy service.
What should I do next?
Materials, tools, van.
Monthly from contractors.
Turnover over £50,000?
Frequently Asked Questions
Can tradespeople claim tools?
Yes. Tools and equipment are allowable, through the cash basis or capital allowances.
Why do CIS subcontractors get refunds?
Deductions are 20% of gross labour, not profit, so many overpay.
Can I claim my work clothes?
Protective clothing and branded workwear, yes. Everyday clothes, no.
Do I need MTD as a tradesperson?
If your gross income is over £50,000 from April 2026, or £30,000 from April 2027.
When must I register for VAT?
When turnover passes £90,000 in any rolling 12 months.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Asim Abbas
I’m Asim Abbas, founder of Wingate Accountants and a Chartered Certified Accountant. I help sole traders, landlords and directors stay on top of their tax with fixed fees and plain-English advice.
