CIS deductions and refunds, tools, van and PPE expenses, National Insurance, the VAT reverse charge and MTD explained for self-employed cladding installers.
For a self-employed cladding installer, the tax story is shaped by two things: the Construction Industry Scheme, which takes tax off you before you ever see the money, and a kit-heavy, van-based working life that generates a long list of genuine expenses. Get both right and the result is usually a refund rather than a bill. Get them wrong, and you either overpay HMRC by thousands or fail to claim the tools, access hire and travel that are the heart of the job.
Whether you fix aluminium composite panels to a new apartment block, fit rainscreen and brise soleil systems on a commercial facade, or carry out remediation on existing buildings, the principles are the same. This guide covers how your profit is taxed, the CIS deductions that drive your refund, the specific expenses a cladding installer can claim, your National Insurance, the VAT reverse charge that catches out so many trades, and the MTD timetable heading your way.
As a sole trader you pay Income Tax on your profit, which is your turnover minus allowable expenses, not on the gross figure on your invoices. For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% up 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, with Class 2 NIC settled through Self Assessment.
Scottish installers pay Scottish Income Tax on their profit across six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) and carry an S-prefixed tax code; 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 have a PAYE job, perhaps a stint employed on a large site, and your code looks wrong, run it through the tax code checker so you are not taxed twice on the same allowance.
The Construction Industry Scheme governs how contractors pay subcontractors, and cladding is squarely within it. When a main contractor or builder pays you for labour, they must deduct tax at source and send it to HMRC. The rate is 20% if you are registered and verified, or 30% if you are not, so registering as a CIS subcontractor is the first thing to do once you start working for contractors. Deductions apply to the labour element only, not to materials you supply, so split labour and materials clearly on every invoice.
Crucially, the CIS deduction takes no account of your GBP 12,570 personal allowance or your tools, van and PPE costs. It is a flat slice off your labour. That is why most cladding subcontractors have overpaid by the time they file, and why your return is usually the route to a refund rather than a bill. Keep every CIS payment and deduction statement from your contractors, because the totals on them are what you offset against your real tax. Our full guide to the CIS subcontractor tax position walks through registration, verification and the refund mechanics in detail, and you can estimate your own position with the CIS tax calculator.
An expense is allowable when incurred wholly and exclusively for the business. For a cladding installer the list is dominated by tools, access equipment, consumables, PPE and vehicle costs, and these are exactly what get missed by anyone who simply accepts the CIS deduction without filing properly.
| Expense | What qualifies | Notes |
|---|---|---|
| Power and hand tools | Rivet guns, drills, grinders, impact drivers, cutting and fixing tools, tape and laser levels | Larger items via the Annual Investment Allowance, fully deductible |
| Access equipment | Hire of scaffold towers, MEWPs, podium steps, ladders and edge protection | Hire is fully deductible; owned towers via AIA |
| Consumables | Rivets, fixings, sealant, tape, blades, drill bits, fire-rated fixings | Fully deductible as used |
| PPE and safety | Harness, lanyard, helmet, gloves, safety boots, eye and ear protection | Replacement and inspection costs allowable |
| Protective workwear | Branded or hi-vis workwear, overalls, and laundering of it | Everyday clothing is never allowable |
| Van and vehicle | Running costs or 45p/25p mileage, fuel, insurance, MOT, repairs, tax | Choose mileage or actual costs and stay consistent |
| Tool insurance and cover | Theft-from-van and tool replacement cover | Site-specific public liability also allowable |
| Cards and memberships | CSCS card, IPAF/PASMA tickets, trade body subscriptions | Renewal and assessment fees allowable |
| Training and CPD | Courses updating existing skills, safety re-certification | Training into a brand-new trade is not allowable |
| Admin and home office | Phone, a share of broadband, quoting and invoicing software, accountancy | Business proportion only |
Cladding is capital-intensive on day one: a rivet gun, a decent drill, cutting gear and edge-protection kit add up fast. Larger tool purchases are claimed through the Annual Investment Allowance, which lets you deduct the full cost in the year you buy, rather than spreading it. Access equipment you hire (towers, MEWPs, podiums) is a straightforward running cost and fully deductible. Keep the invoices, because these are often your largest single deductions and a big driver of the CIS refund.
Most installers run a van full of kit between sites. You can either claim actual running costs (fuel, insurance, repairs, tax, a share of finance) scaled to business use, or use HMRC's simplified mileage rate of 45p per mile for the first 10,000 business miles and 25p thereafter. Travel between your home and a series of different sites is generally allowable for an itinerant trade, but a regular commute to one fixed workplace is not. Pick the method that gives the larger fair deduction and keep a mileage log either way.
The private share of your van, phone and broadband must be excluded. Everyday clothing is never allowable even if you only wear it for work; only genuine PPE and identifiable protective or branded workwear count. Fixed-penalty parking fines and speeding tickets are not deductible, and the cost of buying tools before your trade actually started is pre-trading expenditure, claimed once you begin rather than ignored.
Take a CIS subcontractor with GBP 46,000 of labour invoiced to contractors over the year, with 20% deducted at source.
Turnover (labour): GBP 46,000 CIS deducted at 20% during the year: GBP 9,200
Allowable expenses:
Taxable profit: GBP 46,000 minus GBP 11,600 = GBP 34,400
Income Tax: GBP 34,400 minus GBP 12,570 = GBP 21,830 at 20% = GBP 4,366 Class 4 NIC: GBP 21,830 at 6% = GBP 1,310 True tax and NIC liability: GBP 5,676
Because GBP 9,200 of CIS was already deducted, the installer is due a refund of roughly GBP 3,524 once the liability is settled. That gap is exactly why filing matters: the CIS deduction ignored both the personal allowance and the GBP 11,600 of expenses. Run your own numbers through the sole trader tax calculator to sanity-check the result before you file.
For a cladding subcontractor, the CIS already taken off you is advance tax, not the final bill. File properly, claim every tool, tower hire and mile, and that deduction usually comes back as a refund.
On top of Income Tax you pay Class 4 NIC at 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, with Class 2 NIC now collected through Self Assessment and counting toward your State Pension. Because your liability is worked out on profit, your records have to capture both sides cleanly: every CIS payment and deduction statement from contractors, and every receipt for tools, hire, fuel and PPE. Photograph receipts as you get them, keep CIS statements in one place, and log mileage in real time. The installer who reconciles monthly recovers far more than the one who shoeboxes a year of crumpled receipts in January.
You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period. A busy cladding subcontractor supplying labour and materials can reach this, so watch your rolling total. Once registered, the construction sector's domestic reverse charge usually applies: when you invoice another VAT-registered contractor for CIS-covered cladding labour, you do not add VAT. Instead you note that the reverse charge applies and the contractor accounts for the VAT to HMRC. You still reclaim VAT on your own tools, materials and van costs. The reverse charge does not apply when you bill an end client (such as the building owner) direct, where you charge VAT normally. Because the reverse charge can mean you reclaim more VAT than you collect, many subcontractors end up in a repayment position with HMRC.
Making Tax Digital for Income Tax Self Assessment replaces the annual return with quarterly digital submissions plus a year-end finalisation. The thresholds are based on gross income, not profit and not your net-of-CIS pay:
The key trap for CIS subcontractors is the threshold test: it uses your turnover before the 20% deduction, so a busy installer can be over GBP 50,000 in gross terms even though their bank received much less after CIS. Under MTD you record income and expenses digitally as work happens and send HMRC a summary each quarter using MTD-compatible software, which suits a van-based trade where receipts and CIS statements pile up. Our guide to MTD for sole traders explains the quarterly rhythm in practice.
Not filing because CIS was taken. CIS is advance tax, not a final settlement; skipping the return forfeits a refund you are owed and risks a penalty.
Losing CIS deduction statements. Without the statements you cannot evidence the tax already paid, so the credit and your refund get delayed.
Not splitting labour and materials. CIS applies to labour, not materials, so a vague invoice can have tax deducted from materials too.
Missing tools and access hire. Tower hire, rivet guns and consumables are core deductions; leaving them off inflates your profit and shrinks the refund.
Ignoring the VAT reverse charge once registered. Adding VAT to a contractor invoice that should be reverse-charged creates errors both sides have to unpick.
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