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What is a self-employed builder?

  • 3 min read
  • Last updated 3 Jun 2023

A self-employed builder is someone who works for themselves rather than being employed by a company. The construction sector in the UK has a larger self-employed workforce than in any other sector, so getting clued up on what it means to be self-employed is super-important.

What do you do when you go self-employed?

The main difference between being employed and self-employed is probably the freedom that you get. An employer decides when you work, where you work and how much you’re paid. In contrast, when you’re self-employed, you decide:

  • Your working timetable
  • The rates you’re paid
  • Where in the world you work
  • Which clients you work for

But it’s not all rosy. Being a self-employed builder does come with responsibilities that you’re probably not aware of when you’re employed. And despite having freedom, when you first start working for yourself, it can be tough. You need to make sure that you have enough clients to supplement your income. 

And then there’s tax.

How does tax work for a self-employed builder?

When you’re self-employed, you have to get up close and personal with HMRC. 

You have to declare your untaxed income to HMRC and pay tax on it every year. In order to do that, make sure you get to know the important dates in the year:

  • The tax year – 6th April – 5th April
  • Register for Self Assessment online – 5th October
  • Pay your tax bill – 31st January
  • Payment on Account – 31st July
  • Claim your Construction Industry Scheme (CIS) rebate – from 6th April

When you calculate the tax you owe, there are three things to keep in mind:

  1. Income Tax
  2. National Insurance
  3. Expenses

How does the CIS work for a self-employed builder?

The Construction Industry Scheme is used by HMRC to collect tax from subcontractors in the construction industry. If you work as a builder and you’re self-employed, you’ll be eligible to register for the scheme. 

But why bother?

CIS workers benefit from only having 20% tax deducted from their pay. When you’re not part of the scheme, you have 30% deducted. The 20% invariably works out as being more tax than you actually owe so from the first day of each tax year, you can claim a rebate for what you’ve overpaid. 

This often works out as about £2000. 

How do expenses work?

When you work without an employer, you often have to spend your own money on items that you need for your business. The good news is, you’re allowed to deduct the cost of these items from your overall income when it comes to calculating the tax you owe. It means that you only pay tax on your profits. 

Here are some examples of what you can expense:

  • Equipment
  • Specialist clothing
  • Accounting costs
  • Mileage, fuel and vehicle insurance
  • Marketing costs
  • Parking and toll charges

Read more about expenses here.

Claiming mileage?

Check out our Mileage Allowance calculator. Add in in the miles you’ve travelled and the vehicles you’ve used and see how much you could deduct on your tax return.

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