Choose your business structure

Decide whether to trade as a sole trader, limited company, or partnership. This affects your tax, legal liability, and how you're paid under CIS.

How CIS works

CIS determines how contractors and subcontractors handle tax deductions. Understanding the scheme is essential before starting construction work.

Contractor registration: Must register before taking on your first subcontractor
£3 million threshold: Businesses spending £3m+ on construction in 12 months count as contractors
Subcontractor deduction rate: 20% for registered subcontractors, 30% if unregistered
Gross payment status: Apply for gross payment to avoid deductions (strict tests apply)

Construction Industry Scheme (opens in a new tab)

gov.uk

Register for CIS online (opens in a new tab)

hse.gov.uk

Understand CDM duties (opens in a new tab)

HSE guidance on CDM 2015 requirements for your role.

CSCS card types and requirements

CSCS cards prove competence for your role. You'll need to pass the CITB Health, Safety and Environment test before applying.

Green Labourer Card: Entry level - requires HS&E test pass only (no qualification needed initially)
Red Trainee Card: For workers enrolled on approved construction training - 2-year card (Level 2+ non-competence qual) OR 5-year card (registered on NVQ/SVQ) from Feb 2025
Blue Skilled Worker Card: Requires NVQ Level 2 or equivalent in construction occupation + HS&E test
Gold Supervisory Card: Requires NVQ Level 3/4 or SSSTS qualification + HS&E test
Black Manager Card: Requires NVQ Level 6/degree + SMSTS or equivalent + HS&E test
White Advanced Craft Card: Requires NVQ Level 3 + 5+ years proven experience + HS&E test
Black Professional/Chartered Card: Requires degree + professional body registration (ICE, RICS, CIOB, etc.)

cscs.uk.com

Get your CSCS card (opens in a new tab)

Apply for the right CSCS card for your role.

Get business insurance

Construction businesses need public liability and employer's liability insurance.

Insurance for construction businesses

Construction work carries significant risks. Get appropriate cover before starting work on site.

UK businesses need different types of insurance depending on their activities. Some are legally required, others are contractually required, and some are optional but prudent. Understanding the differences helps ensure adequate protection.

Employers' Liability: LEGALLY REQUIRED if you employ anyone. Minimum £5m cover. Protects against employee injury/illness claims.
Motor Insurance: LEGALLY REQUIRED for any vehicle used for business. Criminal offence to drive uninsured.
Professional Indemnity: Required for some regulated professions under their profession-specific rules, including many solicitors, financial advisers and architects. Covers negligent advice claims.
Public Liability: NOT legally required but often contractually required by clients. Covers third-party injury/damage claims.
Products Liability: NOT legally required but essential for manufacturers and retailers. Covers claims from defective products.
Business Contents: NOT required but recommended. Covers theft, fire, damage to business assets.
Business Interruption: NOT required but recommended. Covers lost income when you cannot trade.
Cyber Insurance: Increasingly important. Covers data breaches, ransomware, GDPR fines.
Key Person: Optional. Compensates business if critical person dies or is incapacitated.

Choosing the right cover:

Do you employ anyone? Employers' Liability is legally required
Do you use vehicles for work? Business motor insurance is legally required
Are you a regulated professional? Check your regulator's profession-specific Professional Indemnity rules
Do you interact with customers or visit premises? Public Liability is practically essential
Do you sell physical products? Products Liability is strongly recommended

Gas Safe and electrical registration

Gas Safe registration is legally required for all gas work. Electrical competent person schemes allow self-certification of Building Regulations compliance.

Gas Safe registration

It is illegal for anyone to carry out work on gas fittings unless they are competent and Gas Safe registered. Gas Safe Register is the official list of gas engineers who are qualified to work safely and legally on gas appliances.

Gas Safe registration covers specific types of gas work:

Cookers and ovens
Boilers and central heating
Gas fires
Water heaters
Commercial catering equipment
LPG and natural gas work

Engineers are only registered for the types of work they are competent to do.

Duties of installers

Gas Safe registered installers must:

Immediately notify relevant emergency control if they find gas escape or unsafe situation
Carry out work in accordance with British Standards and manufacturers' instructions
Complete soundness testing after installation
Issue warning notice (for existing unsafe installations)
Disconnect unsafe appliances
Provide Building Regulations compliance certificate (for notifiable work)

Landlord duties

Although focused on landlords, these rules apply to commercial property owners:

Ensure gas appliances and flues are maintained in safe condition
Arrange annual safety check by Gas Safe registered engineer
Keep safety check records for 2 years
Provide copy of safety record to tenants within 28 days

Warning notices and disconnection

Gas Safe engineers must issue warning notices and/or disconnect appliances when:

Immediately Dangerous (ID): Appliance poses immediate danger - must be disconnected immediately
At Risk (AR): Appliance not immediately dangerous but could become dangerous - should not be used until rectified
Not to Current Standards (NCS): Appliance does not meet current standards but is safe to use

Competent person schemes

Gas Safe registration satisfies Building Regulations self-certification requirements for gas work. Registered engineers can self-certify compliance without separate Building Control notification.

Step 1: Only use Gas Safe registered engineers for all gas work
Step 2: Check engineer's Gas Safe ID card and verify registration online
Step 3: Ensure engineer's registration covers the specific type of work required
Step 4: Request Building Regulations compliance certificate for notifiable work
Step 5: Maintain records of all gas work carried out
Step 6: If warning notice issued, arrange for defects to be rectified immediately (ID) or promptly (AR)
Step 7: For rental/commercial properties, arrange annual gas safety checks
Step 8: Keep gas safety records for at least 2 years
Step 9: Do not use any appliance marked as Immediately Dangerous or At Risk

Find a Gas Safe registered engineer (opens in a new tab)

citb.co.uk

Check qualification requirements for your trade (opens in a new tab)

Find qualifications and registrations needed for your construction trade.

gov.uk

Register for Self Assessment or Corporation Tax (opens in a new tab)

Sole traders use Self Assessment. Limited companies register for Corporation Tax.

All construction businesses must register with HMRC. Your registration requirements depend on your business structure.

Self Assessment (sole traders/partnerships): Register by 5 October after your first tax year
Corporation Tax (limited companies): Register within 3 months of starting to trade
VAT registration threshold: £90,000 turnover in 12 months (mandatory)
PAYE (employers): Register before first payday
CIS (construction): Register before first payment to subcontractors

gov.uk

Check your IR35 status (opens in a new tab)

Use HMRC's CEST tool to help determine if IR35 applies.

Register for VAT if required

Required if turnover exceeds £90,000. Voluntary registration lets you reclaim VAT on materials and equipment.

Health and safety requirements

All construction businesses have legal health and safety duties from day one.

Written policy (5+ employees): Required by law - must record your health and safety policy
Risk assessment: All employers must assess workplace risks and act on findings
Employers' Liability insurance: Mandatory £5 million minimum cover (£2,500/day penalty)
First aid provision: Assess needs and provide appropriate equipment and trained staff
Accident book (RIDDOR): Record injuries and report serious incidents to HSE

HSE - Getting started with health and safety (opens in a new tab)

citb.co.uk

Complete construction-specific H&S training (opens in a new tab)

CITB Site Safety Plus courses: SSSTS for supervisors, SMSTS for managers.

Set up PAYE if hiring employees

If hiring employees (not subcontractors), register for PAYE. You may need both PAYE and CIS.

Employers must register with HMRC before their first payday if they employ anyone and pay them £96 or more per week (from 6 April 2025), give them expenses or benefits, or employ them on a contract that will last longer than one week.

When to register: Before your first payday (4 weeks before recommended)
PAYE reference number: Format: 123/AB45678 - used for all payroll submissions
Accounts Office reference: Separate reference for HMRC correspondence
Activation codes: Posted within 10 working days of registration

What you'll need to register

Business details: Name, address, trading name (if different)
Business type: Sole trader, partnership, or limited company
Contact information: Phone number, email address
SIC code: Standard Industrial Classification describing your business
First payday: Date you'll first pay employees
Number of employees: How many people you'll employ

Registration process

Register online at gov.uk/register-employer
Sign in or create Government Gateway account (separate from personal account if you have one)
Complete registration form with business and employee details
Receive PAYE reference immediately - Can use this straight away
Receive activation codes by post - Within 10 working days, allows you to file online

What happens after registration

Set up payroll software: Use your PAYE reference to configure software
Submit Full Payment Submission (FPS): Required on or before each payday (Real Time Information)
Pay HMRC monthly: Tax and National Insurance deducted from employees due by 22nd of following month
Submit P60s: Annual summary for employees by 31 May each year
File P11D: If you provide expenses or benefits (due 6 July)

Employer's Liability insurance: Legal requirement from first employee - £5 million minimum cover, £2,500/day penalty
Auto-enrolment pensions: Must enroll eligible employees from day one (if they meet criteria)
Employment contracts: Principal statement required on first day of employment; wider statement within 2 months (since 6 April 2020)

Auto-enrol employees into workplace pension

Auto-enrol employed staff (not CIS subcontractors) into a workplace pension.

Minimum employer contribution: 3% of qualifying earnings
Minimum total contribution: 8% (including employee's share)
Earnings threshold: £10,000 per year to auto-enrol
Age range: 22 to State Pension age

gov.uk

Understand construction waste regulations (opens in a new tab)

You need a waste carrier licence to transport waste. Use registered carriers and licensed disposal sites.

gov.uk

Check planning permission and Building Regulations (opens in a new tab)

Major projects require planning permission and Building Regulations approval.

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