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.
Register for the Construction Industry Scheme before you start work
Construction subcontractors should register with HMRC under CIS. Registration is not a legal duty for subcontractors, but registered subcontractors have 20% deducted while unregistered ones face 30% deductions. Contractors paying subcontractors must register and verify workers before payment.
Applies to: Subcontractors and contractors in construction
Official guidance (opens in a new tab)
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)
Register as a contractor, subcontractor, or both before you start work.
Health and safety management under CDM 2015
CDM 2015 places duties on all parties in construction projects. Notifiable projects (30+ days with 20+ workers, or 500+ person days) require F10 notification to HSE before work starts.
Applies to: All construction projects in Great Britain
Official guidance (opens in a new tab)
CDM duty holders and responsibilities
CDM defines specific roles - client, principal designer, principal contractor, designer, and contractor - each with distinct health and safety duties.
Client (regulation 4) Make suitable arrangements for managing the project, including enough time and resources and the welfare facilities in Schedule 2 Provide pre-construction information as soon as practicable to every designer and contractor appointed or being considered Make sure a construction phase plan is drawn up before the construction phase begins Make sure the principal designer prepares a health and safety file that is kept up to date and available for inspection Take reasonable steps to make sure the principal designer and principal contractor carry out their duties If you dispose of your interest in the structure, give the health and safety file to the new owner Principal designer (regulations 11 and 12) Plan, manage and monitor the pre-construction phase and coordinate health and safety during it Identify and eliminate or control foreseeable risks, so far as reasonably practicable Make sure all designers comply with their duties Help the client provide pre-construction information, and provide it to designers and contractors Prepare, review and update the health and safety file Liaise with the principal contractor and share relevant information Principal contractor (regulations 12 to 14) Plan, manage and monitor the construction phase and coordinate health and safety during it Draw up, or arrange for, the construction phase plan before setting up the site, and keep it reviewed and updated Organise cooperation between contractors and make sure they follow the plan where required Provide a suitable site induction, prevent unauthorised access and provide the Schedule 2 welfare facilities Consult workers on matters that may affect their health, safety or welfare Liaise with the principal designer
Appointments
In writing, as soon as practicable and before the construction phase begins
When required
More than one contractor, or more than one foreseeably working at any time
If you do not appoint
The client takes on the principal designer or principal contractor duties
Domestic clients
Client duties normally pass to the contractor (one contractor) or the principal contractor (more than one), or to the principal designer by written agreement
HSE guidance on CDM 2015 requirements for your role.
CSCS cards for site access
Most construction sites require valid CSCS cards for access. While not legally mandatory, principal contractors typically refuse site entry without appropriate card. Different card colours indicate qualification levels.
Applies to: Anyone working on construction sites
Official guidance (opens in a new tab)
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.
Labourer
Unskilled workers only; first card valid 2 years
Trainee
Registered for a qualification; 5-year or 2-year card
Apprentice
Recognised apprenticeship; free; valid 4 years 6 months
Experienced Worker
Registered for NVQ/SVQ level 2 or above; valid 1 year
Blue Skilled Worker
NVQ/SVQ level 2 or apprenticeship; valid 5 years
Gold Skilled Worker
NVQ/SVQ level 3 or advanced craft; valid 5 years
Supervisory
Supervisory or technical NVQ/SVQ level 3 or 4; valid 5 years
Manager
Management or technical NVQ/SVQ level 4 to 7; valid 5 years
Professionally Qualified Person
Member of a CSCS-approved professional body; valid 5 years
Health, safety and environment test
Passed at the level for the role within the last 2 years
Apply for the card that matches your occupation and qualification. The My CSCS app and the Card Finder on the CSCS website show which one that is. Applying for the wrong card can mean you are refused entry to site. Supervisory applicants sit the CITB Specialist Supervisory test and managers sit the Managers and Professionals test.
Apply for the right CSCS card for your role.
Start with the insurance the law requires: if you employ anyone, you must have employers' liability insurance with at least £5 million cover, and business vehicles need motor insurance.
Insurance for construction businesses
Construction work carries significant risks. Get appropriate cover before starting work on site.
The insurance your business needs depends on what it does. Some types are required by law. Some are required by professional regulators. The rest are not required by law, but you may still need them for contracts or to protect your business. Each type below starts with its legal status, so you can see which group it is in.
Employers' Liability
Required by law if you employ anyone, with at least £5 million of cover. Covers claims from employees injured or made ill at work.
Motor Insurance
Required by law for any vehicle used for business on roads or in other public places. Driving uninsured is a criminal offence. Covers claims from accidents in vehicles used for work.
Professional Indemnity
Required by some professional regulators, for example for many solicitors, financial advisers and architects. Covers claims of negligent advice.
Public Liability
Not required by law, but clients and landlords often require it in contracts. Covers claims for injury to other people or damage to their property.
Products Liability
Not required by law, but essential if you make or sell goods. Covers claims from defective products.
Business Contents
Not required by law, but recommended if you have equipment or stock. Covers business assets against theft, fire and damage.
Business Interruption
Not required by law, but recommended if a fire or flood would stop you trading. Covers lost income when you cannot trade.
Cyber Insurance
Not required by law, but recommended if you hold personal data or rely on IT. Covers data breaches, ransomware and regulatory fines where insurable.
Key Person
Not required by law, but worth considering if your business depends on a few people. Covers the business if one of them dies or is incapacitated.
Choosing the right cover Do you employ anyone? Employers' Liability is required by lawDo you use vehicles for work? Business motor insurance is required by law for use on roads or in other public placesAre you in a regulated profession? Check whether your professional regulator requires Professional Indemnity, and how muchDo you deal with customers or visit other premises? Public Liability is not required by law, but clients and landlords often require itDo you make or sell physical products? Products Liability is not required by law, but essential
Trade-specific registrations
Some trades require mandatory registration. Gas work requires Gas Safe registration (criminal offence without). Electrical work benefits from competent person scheme membership (NICEIC, NAPIT). Asbestos work requires HSE licensing.
Applies to: Gas, electrical, asbestos, and other regulated trades
Official guidance (opens in a new tab)
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.
Who may do gas work
Nobody may carry out work on a gas fitting or gas storage vessel unless they are competent to do so. An employer must not let employees do work on a gas fitting or service pipework, and a self-employed person must not do it, unless the employer or self-employed person belongs to a class of persons approved by the Health and Safety Executive. There is a narrow exception for replacing a hose or regulator on a portable or mobile space heater, or a hose joining a refillable cylinder to installation pipework. The Gas Safe Register is where you check an engineer.
Duties after gas work
After work on a gas appliance, the engineer must immediately examine the flue, the supply of combustion air, the operating pressure or heat input (or, if that is not reasonably practicable, the combustion performance) and the safe operation of the appliance. The engineer must then tell the responsible person and the owner of the premises about any defect.
Appliances at work
Every employer and self-employed person must make sure that any gas appliance, installation pipework or flue at a place of work under their control is maintained in a safe condition so as to prevent risk of injury to anyone. The Regulations do not set a fixed inspection interval for these appliances.
Landlords of residential lettings
The landlord duties apply to premises let for residential purposes under a lease or licence. They do not apply to gas appliances used only in a part of a building occupied for non-residential purposes. The landlord must:
Keep gas fittings and flues in a safe condition
Have each appliance and flue checked for safety within 12 months of installation and then at least every 12 months
Use an engineer who belongs to an HSE-approved class for the work and the checks
Keep a record of each check until two further checks have been done (or for 2 years from the last check if the appliance is removed)
Give each existing tenant a copy of the record within 28 days of the check, and a new tenant a copy before they move in
Gas escapes
If you know or suspect gas is escaping into premises, you must immediately take all reasonable steps to shut off the supply. If gas keeps escaping or a smell persists, you must immediately tell the gas supplier.
Competence
Everyone doing gas work must be competent
Approved class
Employers and self-employed gas workers must belong to a class approved by the HSE (Gas Safe Register)
Appliances at work
Maintained in a safe condition by the employer or self-employed person
Landlord safety check
At least every 12 months, in residential lettings
Landlord record
Kept until two further checks have been done
Copy to existing tenants
Within 28 days of the check
Applies to
England, Scotland and Wales
Find a Gas Safe registered engineer (opens in a new tab)
Find qualifications and registrations needed for your construction trade.
Sole traders use Self Assessment. Limited companies register for Corporation Tax.
Register with HMRC
All construction businesses must register with HMRC. Your registration requirements depend on your business structure.
IR35 off-payroll working rules
Contractors through limited companies must consider IR35. These rules determine if you're taxed as employee or self-employed. CIS and IR35 are separate - you can be subject to both simultaneously.
Applies to: Construction contractors working through personal service companies
Official guidance (opens in a new tab)
IR35 and CIS interaction
IR35 and CIS are separate tax systems. Understanding how they interact is important for contractors working through limited companies.
CIS and IR35 are separate systems that can both apply:
CIS deductions apply to construction payments regardless of IR35 status
If inside IR35, client may need to operate PAYE in addition to CIS
CIS deductions count towards tax liability but do not replace IR35 obligations
Contractors can be inside IR35 and subject to CIS simultaneously
Use HMRC's CEST tool to help determine if IR35 applies.
You must register for VAT when your taxable turnover passes the registration threshold in any rolling 12 months, or when you expect it to pass the threshold within the next 30 days alone.
Health and safety requirements
All construction businesses have legal health and safety duties from day one.
Written policy (5+ employees)
Required in writing
Risk assessment
Required for all employers
Employers' Liability insurance
£5 million minimum cover
First aid provision
Equipment and people, based on assessed needs
Accident book (RIDDOR)
Record injuries; report specified incidents to HSE
HSE - Getting started with health and safety (opens in a new tab)
CITB Site Safety Plus courses: SSSTS for supervisors, SMSTS for managers.
Register as employer before first payday. You'll need both PAYE (employees) and CIS (subcontractors).
Register as an employer
If hiring employees (not subcontractors), register for PAYE. You may need both PAYE and CIS.
You must register with HMRC as an employer before your first payday , and no more than 2 months before you start paying people. You must register for PAYE if, in the 2026 to 2027 tax year, an employee is paid £129 or more a week, gets expenses and company benefits, is getting a pension, has had another job, or has received Jobseeker's Allowance, Employment and Support Allowance or Incapacity Benefit.
When to register
Before your first payday, no more than 2 months before
Employer PAYE reference
Format 123/AB45678, sent by letter
Accounts Office reference
13 characters, used to pay HMRC
Activation code
Posted within 10 days; activate within 28 days
What you'll need to register Your business name, address and trading name, if different. Your business type: sole trader, partnership or limited company. A phone number and email address. Your SIC code, which describes what your business does. The date you'll first pay employees. How many people you'll employ. Registration process Register online at gov.uk/register-employer. Sign in with a Government Gateway user ID, or create one (separate from your personal account if you have one). Fill in the form with your business and employee details. HMRC sends your employer PAYE reference number in a letter. If you need to pay someone before it arrives, run payroll, store the full payment submission and send it to HMRC late. HMRC posts your PAYE Online activation code within 10 days. Activate your account within 28 days of the date on the letter. What happens after registration Set up your payroll software using your PAYE reference. Send a Full Payment Submission (FPS) on or before each payday (Real Time Information). Pay the tax and National Insurance you deducted to HMRC by the 22nd of the following month. Give employees their P60 annual summary by 31 May each year. File P11D by 6 July if you provide expenses or benefits.
Employer's Liability insurance
Legal requirement from first employee - £5 million minimum cover, £2,500/day penalty
Auto-enrolment pensions
Must enrol 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)
Register as an employer (opens in a new tab)
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
Over £10,000 a year to auto-enrol
Age range
22 to State Pension age
Notify large projects and check for asbestos
A project is notifiable if the construction work is scheduled to last longer than 30 working days with more than 20 workers on site at the same time, or to exceed 500 person days. The client must notify HSE in writing as soon as practicable before the construction phase begins, and the notice must be displayed in the site office.
Before you start demolition, maintenance or any other work that could expose your workers to asbestos, assess whether asbestos is present, what type and in what material and condition. If in doubt, assume that it is present and follow the asbestos rules.
When a project is notifiable and how to send the notice.
Surveys, the asbestos register and working safely around asbestos.
Register as a waste carrier
If your business transports waste, including waste it produces itself, register as a waste carrier with the Environment Agency. You can get an unlimited fine if you do not register. When you register you are told whether your registration is upper tier, which you renew every 3 years, or lower tier, which does not need renewing. Use licensed sites to dispose of the waste.
Upper and lower tier registration, costs and keeping your details up to date.
Major projects require planning permission and Building Regulations approval.