Allowable expenses, van and tools, CIS deductions, VAT, National Insurance and MTD explained for UK self-employed alarm and security installers.
An alarm installer's tax position looks simple from the van seat and gets complicated on paper. You spend your days running cable through lofts, drilling bell boxes onto gable walls, terminating panels and commissioning CCTV, then at some point each year you have to turn a glovebox full of receipts, a phone full of CIS statements and a diary of jobs into a Self Assessment return. The trade sits squarely in the construction world, which means the Construction Industry Scheme, the reverse charge and a fleet of van-and-tool deductions all apply to you in a way they do not to most sole traders.
This guide is written for the security and alarm trade specifically: how your profit is taxed, the expenses that genuinely belong to this job, how CIS deductions work and why they usually mean a refund, and when VAT and Making Tax Digital start to bite. Get the record-keeping right as you go and the annual return stops being a January scramble.
You pay Income Tax on profit, which is your total income from installs and call-outs (labour and any materials you bill) minus allowable expenses. For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% to GBP 50,270, 40% to GBP 125,140 and 45% above, with the personal allowance tapering away between GBP 100,000 and GBP 125,140 to create an effective 60% band. Class 4 National Insurance is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, and Class 2 NIC is settled through Self Assessment.
Installers working in Scotland pay Scottish Income Tax on their profit through six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) and carry an S-prefixed tax code, while National Insurance stays UK-wide. Welsh installers have a C-coded tax code at rates currently matching the rest of the UK. If you also hold a PAYE job, perhaps an employed role with a security firm alongside your private installs, that employment can distort your code, so run it through the tax code checker if anything looks off.
If you fit alarms, CCTV, access control or security cabling as part of a building, refurbishment or fit-out project, you are almost certainly inside the Construction Industry Scheme. When you subcontract to a builder, electrician or main contractor, they must verify you with HMRC and deduct tax from the labour element of your invoice before paying you.
The practical effect is that money is taken off your invoices throughout the year. Because the deduction is a flat 20% of labour with no account taken of your personal allowance or your expenses, you usually pay too much during the year and are owed a refund when you file. To get it, you offset the CIS deductions against your final Income Tax and NIC bill on your return, and HMRC repays the excess.
A few points that matter to this trade specifically:
Our full CIS subcontractor guide covers registration, gross payment status and reconciliation in depth, and you can estimate your likely refund with the CIS tax calculator.
An expense is allowable when it is incurred wholly and exclusively for the business. For a security installer the list is dominated by the van, tools, test gear and the consumables you fit on site.
| Expense | What qualifies | Notes |
|---|---|---|
| Van running costs | Fuel, insurance, road tax, servicing, repairs, tyres, breakdown cover, or HMRC mileage at 45p/25p | Choose actual costs or the simplified mileage rate, not both |
| Tools and power tools | Drills, SDS bits, screwdrivers, crimpers, cable rods, fish tape | Usually claimed in full via the Annual Investment Allowance |
| Test and commissioning gear | Multimeters, network testers, cable tracers, CCTV test monitors | Equipment claimed under AIA |
| Access equipment | Extension ladders, step ladders, tower or podium hire | Hire is a running cost; bought gear is AIA |
| Consumables and materials | Cable, conduit, trunking, back boxes, fixings, batteries, connectors, tamper screws | Everyday running costs, deducted as you buy them |
| PPE and branded workwear | Gloves, safety glasses, knee pads, hi-vis, logoed polos and jackets | Protective and branded clothing only; plain everyday clothes are not allowable |
| Phone, software and admin | Mobile, install/quoting apps, monitoring platform logins, cloud storage for job photos | Claim the business proportion |
| Insurance and trade fees | Public liability, tools cover, SSAIB or NSI accreditation, NICEIC membership | Allowable where relevant to the trade |
| Training and certification | Courses keeping your alarm, IP-CCTV or working-at-height skills current | Updating existing skills only, not a brand-new trade |
| Other site costs | Parking, congestion and ULEZ charges, tip fees, accountancy and bank charges | Commuting from home to a regular base is not allowable |
The van is usually your single biggest cost. You can either claim actual running costs (fuel, insurance, tax, servicing, repairs) with the business-use proportion, or use HMRC's simplified mileage rate of 45p a mile for the first 10,000 business miles and 25p thereafter. Pick one method per vehicle and stick with it; the mileage rate is simpler and often generous for a high-mileage installer covering a wide patch.
Tools, test equipment and the van itself (if bought outright) are normally claimed in full in the year of purchase through the Annual Investment Allowance, rather than spread over years. That means a new SDS drill, a CCTV test monitor or a replacement ladder is fully deductible straight away, which can be the difference between a tax bill and a refund in a year you re-kitted.
The private share of your van, phone and broadband must be stripped out. Ordinary commuting from home to a fixed workplace is not allowable, though travel between job sites is. Plain everyday clothing is never allowable even if you only wear it for work; only protective gear and properly branded workwear count. And a parking fine picked up while on a job is specifically disallowed by HMRC, however unfair it feels.
Take a self-employed installer doing a mix of CIS subcontract work for builders and direct private installs, invoicing GBP 46,000 of labour and materials over the year, with GBP 4,200 of CIS already deducted.
Income: GBP 46,000 (GBP 31,000 labour, GBP 15,000 materials billed on)
Allowable expenses:
Taxable profit: GBP 46,000 minus GBP 16,400 = GBP 29,600
Income Tax: GBP 29,600 minus GBP 12,570 = GBP 17,030 at 20% = GBP 3,406
Class 4 NIC: GBP 17,030 at 6% = GBP 1,022
Income Tax and NIC due: GBP 4,428. But GBP 4,200 of CIS has already been deducted at source, so the balance owed is only about GBP 228 once the deductions are offset, and a year with fewer CIS jobs or heavier tool spend could flip that into a refund. Sanity-check your own figures with the sole trader tax calculator.
For an alarm installer the tax win is rarely the headline rate. It is splitting labour from materials on every invoice and keeping each CIS statement, because that is what turns a year of deductions into a refund.
You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period. Installers reach this sooner than expected because the figure includes the kit and materials you bill, not just your labour, so a busy year of larger system fit-outs can tip you over.
If you do register and you mainly work for builders and businesses, they reclaim the VAT you charge, so it is relatively painless and lets you reclaim VAT on your van, tools and stock. The catch unique to construction is the VAT domestic reverse charge: on most CIS construction work between VAT-registered businesses, you do not charge VAT on your invoice at all. Instead the contractor accounts for it directly to HMRC, and your invoice must state that the reverse charge applies. Get this wrong and your invoices will be rejected, so it is worth understanding before you register.
Making Tax Digital for Income Tax Self Assessment replaces the once-a-year return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income before expenses and before CIS deductions, not profit:
Because the test is on gross turnover, a CIS installer can hit GBP 50,000 of qualifying income while taking home far less after deductions, so check your invoiced total, not your bank balance. The shift to keeping records digitally as you go actually suits this trade: photograph each receipt at the merchant's counter, log materials against the job, and your quarterly summary is mostly built before HMRC asks for it. Our guide to MTD for sole traders walks through what the quarterly rhythm looks like in practice.
Not registering for CIS as a subcontractor. Staying unregistered means a 30% deduction instead of 20%, a needless cash-flow hit you reclaim only at year end.
Billing labour and materials as one line. CIS is deducted on labour only, so lumping in the kit inflates the deduction and ties up more of your cash than necessary.
Binning CIS deduction statements. They are the evidence behind your refund. Lose them and you may struggle to prove tax already paid.
Ignoring the VAT reverse charge. On construction work between VAT-registered firms you usually should not be charging VAT on the invoice at all.
Counting only take-home pay for MTD. The thresholds are measured on gross income before CIS and expenses, so judge them on full turnover.
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