Self-Assessment for Builders: Your First Tax Return Step by Step

‍‌‌‌​‌​​‌​‌​‌​​‌‌‌​​​​‌​​​​​​​‌​‍SiteKiln gives you plain-English information, not legal advice. If you need advice specific to your situation, talk to a qualified accountant or tax adviser.

The short version

As a self-employed builder or CIS sub, you're taxed on profit, not on every pound that hits your bank. Profit is your total invoiced income minus your allowable business expenses, plus any capital allowances for bigger kit like vans and heavy tools. You list these on your Self Assessment, add the CIS already deducted, and HMRC work out whether you owe more tax or get some back.

Why it matters

If you don't claim your proper construction expenses, you'll overpay tax on money you never really "kept" because it went on fuel, tools and site costs. Done properly, a typical CIS sub with £30-40k of income can often turn a scary tax bill into a manageable number, or even a refund, just by claiming what HMRC already say is allowed. Get it wrong the other way -- making things up or copying someone else's dodgy list -- and you're into penalties and HMRC letters.

This bit is about self-employed trades in construction -- sole traders and CIS subcontractors. If you're on PAYE (for example on the books or via some umbrellas), the rules are different and sit under ITEPA 2003 for employment expenses, not the self-employed rules. You file using Self Assessment, claim business expenses that are "wholly and exclusively" for your trade, and HMRC set your final bill after knocking off CIS you've already paid on account.

5.3.1 What you actually put on the tax return

On your Self Assessment, on the self-employment pages, you'll usually need to show:

• Your total CIS/self-employment income -- the amount you invoiced, not what you got after CIS or materials.
• Your allowable expenses -- day-to-day business costs like fuel, tools, phone, insurance.
• Any capital allowances on bigger items like a van or expensive kit.
• The total CIS tax already deducted from your payments, which HMRC offset against the tax and Class 4 NIC they work out.

You don't send receipts with the return, but you must keep them and your CIS statements in case HMRC ask later.

5.3.2 Core expenses most construction subs can claim

HMRC give a general list of allowable self-employed expenses, which you apply to your building work. Common categories for builders and trades:

• Vehicle and travel: fuel, servicing, repairs, insurance, tax, parking and tolls, either split business/private or using HMRC's flat mileage rates.
• Tools and small kit: hand tools, power tools, batteries, bits, site radios, consumables like blades and discs.
• Protective clothing and uniforms: safety boots, hi-viz, hard hats, overalls, specialist workwear branded or used solely for work.
• Materials and skips: goods and consumables you buy to do the job and bill on to the client.
• Phone and internet: the business share of your mobile and data.
• Insurance: public liability, van insurance (business element), tool insurance, professional indemnity if you have it.
• Accountancy and software: accountant fees, bookkeeping apps, CIS/SA software.
• Use of home: a slice of home costs if you use a room at home as an office, either real costs split or HMRC's flat-rate simplified expenses.

The line is simple: if you wouldn't have spent it without the business, and it's not personal, there's a good chance some or all of it is allowable.

5.3.3 Travel and "site to site" mileage

Travel is a big one in construction, and it's where people mix up employee rules (ITEPA 2003) and self-employed rules.

For a self-employed sub:

• You can usually claim travel between home (used as a base) and different temporary sites, plus between sites, as business travel.
• You normally can't claim private commuting -- for example, regular travel to a permanent workplace if you've basically parked yourself there full-time for years.

Two ways to do it:

• Keep all van costs and claim the business proportion (say 70% business, 30% private) based on mileage or another fair method.
• Or use HMRC's simplified mileage method -- a flat rate per business mile -- and don't then separately claim fuel/repairs.

ITEPA 2003 (sections 337-342) is what HMRC use to judge travel for employees and umbrella workers, but the underlying idea still helps you: ordinary commuting is not a business expense, genuine site-to-site work is.

5.3.4 Tools, kit and capital allowances

For tools and gear, HMRC split things into:

• Revenue expenses -- smaller or regularly replaced items (drills, saws, PPE, consumables) you can claim in full in the year you buy them.
• Capital items -- bigger or longer-lasting kit (vans, expensive machinery, some IT) which usually go through capital allowances instead.

In practice, many small traders use the Annual Investment Allowance or other small-business rules, which often let you claim most everyday kit in full anyway, but the key is to keep invoices and know what you actually bought.

5.3.5 What you cannot claim (even if "everyone does")

Common no-go areas:

• Normal everyday clothing -- jeans, hoodies, trainers -- even if you only wear them on site.
• Personal food and drink -- your normal lunch or coffee.
• Fines and penalties -- parking fines, speeding tickets, HMRC penalties.
• Purely personal spend -- holidays, family shopping, personal rent or mortgage.

There are grey areas around subsistence and staying away overnight, but again the test is whether it's an extra cost you only have because of the job, not just your usual living cost.

5.3.6 How CIS and expenses work together on the return

This is where a lot of subs get confused.

On the tax return you:

• Put your gross income -- the full invoice amount before CIS, even if that includes materials.
• Deduct your business expenses and capital allowances to get your taxable profit.
• HMRC calculate income tax and Class 4 NIC on that profit, then knock off the CIS already deducted as a credit.

If CIS taken off is more than the final tax and NIC due, you get a refund; if it's less, you pay the balance. That's why logging every CIS statement and every claimable expense matters -- it's the difference between a nasty surprise and money back.

Putting it together -- a real-world CIS year

Let's say you're a self-employed CIS sole trader, on the 20% rate, working a fairly normal year.

• Total CIS income invoiced to contractors: £40,000 (labour and materials).
• CIS tax deducted at 20% on the labour element over the year: £6,000 in total.

You keep decent records and, when you add them up, you have:

• Vehicle and travel (fuel, insurance share, repairs, parking, etc.): £6,000.
• Tools, PPE and small kit: £2,000.
• Phone and internet (business share): £600.
• Insurance (public liability, van business share, tools): £800.
• Materials you bought yourself and passed on in jobs (already included in the £40k income): £8,000.
• Other running costs (accountant, software, odds and ends): £600.

Step 1 -- Work out your taxable profit

Start with your income, then knock off expenses:

• Income (invoices before CIS): £40,000.
• Less expenses:
  • Vehicle and travel: £6,000
  • Tools/PPE: £2,000
  • Phone/internet: £600
  • Insurance: £800
  • Materials: £8,000
  • Other costs: £600
  • Total expenses: £18,000.
• Profit for tax = £40,000 - £18,000 = £22,000.

That £22,000 is what HMRC look at for income tax and Class 4 NIC.

Step 2 -- HMRC calculate your tax

Very simplified (ignoring detailed NIC bands, just to show the flow):

• Personal allowance (assuming standard): £12,570 tax-free.
• Taxable income = £22,000 - £12,570 = £9,430.
• Income tax at 20% on £9,430 ≈ £1,886.
• Then there's Class 4 NIC on your profit as well (not doing the full bands here), which might add, say, roughly £1,000-£1,500 depending on the exact year and thresholds.
• So ballpark total HMRC bill on the return might be around £3,000-£3,400 (tax plus Class 4 NIC) on that £22k profit.

Step 3 -- Knock off the CIS already taken

Over the year, contractors have already sent HMRC £6,000 in CIS on your behalf.

On the return HMRC do:

• Total tax + Class 4 NIC due (say): £3,200.
• Less CIS already paid: £6,000.
• Result: you've overpaid by £2,800, so HMRC owe you a refund of around £2,800 once your return is processed.

If your expenses were lower, or you had other income, that refund would shrink or turn into a top-up bill instead. But the structure is always the same: correct income, realistic expenses, then CIS knocked off as a credit.

Checklist -- before you hit "Submit" on Self Assessment

Use this as your pre-file check:

• Gather all CIS statements and make sure the total CIS deducted is correct.
• Add up your total invoiced income for the year, not the "after CIS" figure.
• List your main expense categories (vehicle, tools, PPE, phone, insurance, materials).
• Decide mileage vs actual van costs and apply one method consistently.
• Separate clearly business costs from personal spend.
• Keep receipts, invoices and bank statements somewhere safe for at least 5 years after the filing deadline.

What to do next

• Gather all your CIS statements for the tax year and check the total CIS deducted matches your records.
• List your main expense categories with real numbers, not guesses.
• Decide whether you are using actual vehicle costs or simplified mileage -- pick one method and stick with it.
• File your return by 31 January (online) to avoid automatic penalties.
• If you think you are owed a refund, file early so HMRC process it sooner.

Sources and legislation

• Income Tax (Earnings and Pensions) Act 2003 -- travel, clothing and employment expense rules. legislation.gov.uk/ukpga/2003/1
• Income Tax (Trading and Other Income) Act 2005 -- self-employed trading income and allowable deductions. legislation.gov.uk/ukpga/2005/5
• Finance Act 2004 -- CIS deduction and credit rules. legislation.gov.uk/ukpga/2004/12
• Capital Allowances Act 2001 -- Annual Investment Allowance and plant/machinery relief. legislation.gov.uk/ukpga/2001/2

Related guides on this site

• 5.6 Expenses you can claim
• 5.11 Annual investment allowance
• 5.1 Registering as self-employed for construction
• 5.14 Self Assessment penalties
• 5.15 Record keeping
• 14.1 Day rate vs price work vs quoted

Frequently asked questions

When do I need to file my first tax return?

You must register as self-employed with HMRC by 5 October in your business's second tax year. So if you started working for yourself any time between 6 April 2025 and 5 April 2026, you must register by 5 October 2026. Your first Self Assessment tax return is then due by 31 January 2027 (online) or 31 October 2026 (paper -- but nobody files paper anymore).

Don't wait until the deadline. Register at gov.uk as soon as you start -- it can take a few weeks to get your UTR (Unique Taxpayer Reference) and activation code. If you're already having CIS deductions taken, you should already be registered, but double-check.

What expenses can builders claim on tax?

You can claim any expense that's wholly and exclusively for your business. Common ones: tools and equipment, work clothing and PPE (but not ordinary clothes), van running costs (fuel, insurance, servicing, MOT), materials you supply, phone costs (business percentage), accountancy fees, insurance, CSCS card and training costs, advertising, and the cost of running a home office if you do your admin from home.

You cannot claim for travel between home and a permanent workplace, food and drink during a normal working day (unless you're genuinely travelling), fines and penalties, or anything with a personal element. Keep every receipt and use an app like FreeAgent, QuickBooks or even a spreadsheet. HMRC can ask to see your records going back 5 years, and "I lost the receipts" isn't an answer they accept.

Do I need an accountant as a self-employed builder?

You don't legally need one -- you can file your Self Assessment yourself through HMRC's online system. But a decent accountant will almost certainly save you more than they cost. They'll spot expenses you're missing, keep you compliant, and deal with HMRC so you don't have to. Expect to pay £150-£500 per year for a basic self-employed tax return, more if your affairs are complex.

From April 2026, Making Tax Digital for Income Tax (MTD ITSA) starts rolling in for self-employed people with income over £50,000, meaning you'll need compatible software and quarterly reporting. An accountant who handles MTD compliance is worth their weight in gold. Ask other tradespeople who they use -- word of mouth is the best way to find one who understands construction.

What happens if I miss the tax deadline?

If you miss the 31 January online filing deadline, HMRC hits you with automatic penalties: £100 immediately (even if you owe nothing), then £10 per day after 3 months (up to £900), then additional penalties at 6 and 12 months of 5% of the tax due (or £300, whichever is higher). Miss the payment deadline too and you'll get interest charges and surcharges on top.

If you're late, file as soon as possible -- the penalties keep growing. If you have a reasonable excuse (serious illness, bereavement, house fire -- not "I forgot"), you can appeal. Call HMRC's Self Assessment helpline on 0300 200 3310. Don't bury your head in the sand -- a £100 penalty becomes a £1,600+ problem if you ignore it for a year.

Frequently asked questions

When do I need to file my first tax return?

You must register as self-employed with HMRC by 5 October in your business's second tax year. So if you started working for yourself any time between 6 April 2025 and 5 April 2026, you must register by 5 October 2026. Your first Self Assessment tax return is then due by 31 January 2027 (online) or 31 October 2026 (paper -- but nobody files paper anymore).

Don't wait until the deadline. Register at gov.uk as soon as you start -- it can take a few weeks to get your UTR (Unique Taxpayer Reference) and activation code. If you're already having CIS deductions taken, you should already be registered, but double-check.

What expenses can builders claim on tax?

You can claim any expense that's wholly and exclusively for your business. Common ones: tools and equipment, work clothing and PPE (but not ordinary clothes), van running costs (fuel, insurance, servicing, MOT), materials you supply, phone costs (business percentage), accountancy fees, insurance, CSCS card and training costs, advertising, and the cost of running a home office if you do your admin from home.

You cannot claim for travel between home and a permanent workplace, food and drink during a normal working day (unless you're genuinely travelling), fines and penalties, or anything with a personal element. Keep every receipt and use an app like FreeAgent, QuickBooks or even a spreadsheet. HMRC can ask to see your records going back 5 years, and "I lost the receipts" isn't an answer they accept.

Do I need an accountant as a self-employed builder?

You don't legally need one -- you can file your Self Assessment yourself through HMRC's online system. But a decent accountant will almost certainly save you more than they cost. They'll spot expenses you're missing, keep you compliant, and deal with HMRC so you don't have to. Expect to pay £150-£500 per year for a basic self-employed tax return, more if your affairs are complex.

From April 2026, Making Tax Digital for Income Tax (MTD ITSA) starts rolling in for self-employed people with income over £50,000, meaning you'll need compatible software and quarterly reporting. An accountant who handles MTD compliance is worth their weight in gold. Ask other tradespeople who they use -- word of mouth is the best way to find one who understands construction.

What happens if I miss the tax deadline?

If you miss the 31 January online filing deadline, HMRC hits you with automatic penalties: £100 immediately (even if you owe nothing), then £10 per day after 3 months (up to £900), then additional penalties at 6 and 12 months of 5% of the tax due (or £300, whichever is higher). Miss the payment deadline too and you'll get interest charges and surcharges on top.

If you're late, file as soon as possible -- the penalties keep growing. If you have a reasonable excuse (serious illness, bereavement, house fire -- not "I forgot"), you can appeal. Call HMRC's Self Assessment helpline on 0300 200 3310. Don't bury your head in the sand -- a £100 penalty becomes a £1,600+ problem if you ignore it for a year.

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