CIS deductions and refunds, allowable expenses for rigs, core bits, PPE and your van, NIC, VAT and MTD for Income Tax explained for self-employed drilling operatives.
Diamond drilling is a precision trade that throws up a messy tax position. You core through reinforced concrete for services, drill anchor holes, cut openings for ducting and lifts, and run controlled water and slurry to keep the bit cool and the dust down. The work is mobile, kit-heavy and almost always subcontracted to a principal contractor, which means two things at tax time: the Construction Industry Scheme has already taken a bite out of your labour, and you are sitting on a pile of consumable and equipment costs that most people in other trades never face.
Get this right and you are not just compliant, you are very likely owed money. This guide covers how your profit is actually taxed, the CIS deductions that drive your annual refund, the specific expenses a driller can claim, record-keeping, National Insurance, VAT including the construction reverse charge, and when Making Tax Digital pulls you onto quarterly reporting.
As a sole trader you pay Income Tax on profit, which is your total drilling income minus allowable expenses, not on your turnover and definitely not on the net figure left after CIS. 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, with Class 2 NIC settled through Self Assessment.
Scottish drillers pay Scottish Income Tax on 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 operatives have a C-coded tax code at rates currently matching the rest of the UK. If you also hold a PAYE job, or a contractor has put you on the wrong CIS status, your code can end up distorted, so run it through the tax code checker.
Diamond drilling is construction work, so the Construction Industry Scheme governs how you get paid. When you invoice a principal contractor, they verify you with HMRC and deduct tax from the labour element of your invoice before paying you. If you are registered under CIS the rate is 20%; if you are not registered it jumps to 30%, so registering is the first thing to sort.
The key point is that the 20% comes off your gross labour with no allowance for your personal allowance, your expenses, or the basic-rate band. Your real tax bill is calculated on actual profit, which is far lower after you deduct core bits, rig hire, fuel and PPE. The CIS already paid is then offset against that smaller bill, and because it almost always overshoots, HMRC refunds the difference. For a hard-working driller with serious kit costs, the refund is frequently a four-figure sum.
Two habits protect that refund. First, keep every CIS payment and deduction statement, because that is your proof of tax already paid. Second, itemise materials separately on your invoices where you can, since CIS is deducted from labour only, not from the cores and consumables you supply. Our full CIS subcontractor guide walks through registration, gross payment status and reconciling deductions, and you can model your own position with the CIS tax calculator.
An expense is allowable when incurred wholly and exclusively for the business. Drilling is unusually expensive to run, so this is where your taxable profit, and your refund, are won or lost. Capture everything.
| Expense | What qualifies | Notes |
|---|---|---|
| Diamond core bits and segments | Core barrels, crowns, segments, re-tipping and sharpening | Consumed fast on rebar-heavy concrete; fully deductible |
| Drill rigs and stands | Rig hire, anchors, vacuum bases, hand-held core drills | Hire is a running cost; purchase claimed via Annual Investment Allowance |
| Water and slurry control | Water bowsers, pumps, slurry rings, wet vacs, collection mats | Essential for wet coring; fully deductible |
| Dust and power | FFP3 dust extraction, M-class vacuums, generators, transformers | Health-and-safety kit, fully allowable |
| PPE | Safety boots, gloves, FFP3 masks, ear defenders, goggles, branded overalls | Protective gear allowable; everyday clothing is not |
| Van and vehicle | Mileage at HMRC rates, or actual running costs and capital allowances | Pick one method per vehicle and keep a mileage log |
| Small tools and blades | Drills, breakers, diamond blades, extension leads, hoses | Replaceable tooling deductible as bought |
| Insurance | Public liability, tools-in-transit, plant cover | Trade insurance fully allowable |
| Tickets and cards | CSCS card, abrasive wheels, PASMA, IPAF, asbestos awareness | Renewals and tickets that maintain existing skills |
| Professional fees | Accountancy, bookkeeping, business banking | Fully deductible |
Diamond core bits are a genuine consumable, not a one-off tool. Drilling through heavily reinforced concrete wears segments quickly, and re-tipping or replacing barrels is a constant cost most other trades never see. Treat bits, segments, blades and re-tip charges as running expenses claimed in the year you buy them. Keep the supplier invoices, because a busy year of structural drilling can easily run thousands of pounds of cores alone, and every pound cuts your taxable profit.
Your van is a mobile workshop loaded with rigs, water tanks and generators, so it is rarely cheap to run. You choose either simplified mileage (45p per business mile to 10,000 miles, then 25p), which needs only a mileage log, or actual costs (the business proportion of fuel, repairs, insurance, plus capital allowances on the van). A heavy, high-mileage van hauling drilling plant often produces a bigger deduction on actual costs, so work it out both ways in year one and stick with your choice while you own the vehicle. Travelling to a temporary site is business travel; an ordinary commute to a permanent base is not.
The private share of dual-use costs (your phone, broadband and any personal van mileage) must be stripped out. Everyday clothing is never allowable even if you only ever wear it on site, although genuine PPE and branded protective overalls are fine. Fines, parking penalties and the cost of your own meals on a normal working day are out. And training that gets you into a brand-new trade is not allowable, although tickets and refreshers that maintain your existing drilling skills are.
Take an operative who billed GBP 52,000 of labour over the year under CIS, with the contractor deducting 20% at source.
Gross labour income: GBP 52,000 CIS deducted at source (20%): GBP 10,400 already paid to HMRC
Allowable expenses:
Taxable profit: GBP 52,000 minus GBP 18,200 = GBP 33,800
Income Tax: GBP 33,800 minus GBP 12,570 = GBP 21,230 at 20% = GBP 4,246 Class 4 NIC: GBP 21,230 at 6% = GBP 1,274 Total tax and NIC due: GBP 5,520
Against that GBP 5,520 liability the driller has already paid GBP 10,400 through CIS, so HMRC refunds roughly GBP 4,880 (before any Class 2 NIC and on-account adjustments). That refund is entirely down to claiming the consumables and van costs properly. Run your own figures through the sole trader tax calculator or the CIS calculator to estimate your position.
For a diamond drilling operative the refund hides in the receipts. Every core bit, every litre of fuel and every CIS statement you keep is money back at the end of the year.
The trade is mobile and the paperwork scatters, so a simple system pays for itself. Keep every CIS payment and deduction statement, since those prove the tax already taken. Photograph or file supplier invoices for cores, segments, blades and rig hire as you buy them. Run a mileage log if you claim mileage, or keep fuel and repair receipts if you claim actual costs. Save your invoices to each contractor with labour and materials shown separately. Doing this continuously, rather than in a January panic, is also exactly what Making Tax Digital will require.
National Insurance for a driller is Class 4 at 6% then 2% on profit as above, plus Class 2 settled through your Self Assessment, which protects your State Pension record. These are calculated on profit, not on your gross CIS payments.
On VAT, you must register once taxable turnover passes GBP 90,000 in any rolling 12-month period, counting both labour and materials. For most construction labour supplied to another VAT-registered, CIS-registered contractor, the domestic reverse charge applies. That means you do not add VAT to the invoice; the contractor accounts for the VAT instead. You still reclaim VAT on your rigs, bits, fuel and tools, so many drillers who register end up in a regular VAT repayment position, which is cash back rather than a cost. Check your customer's status before deciding whether reverse charge applies to a given job.
Making Tax Digital for Income Tax Self Assessment replaces the annual return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income, not profit:
Because the test is on turnover, a driller billing GBP 55,000 of labour and materials is in from April 2026 even though expenses bring profit well below that. The shift suits this trade once you adapt: instead of hunting down a year of CIS statements and core-bit receipts each January, you log them digitally as they happen and send HMRC a summary each quarter. Our guide to MTD for sole traders shows what the quarterly rhythm looks like in practice.
Not registering for CIS. Staying unregistered means 30% deducted instead of 20%, tying up more of your cash until you reconcile at year end.
Throwing away CIS statements. Without them you cannot prove the tax already paid, and your refund becomes guesswork HMRC may query.
Forgetting consumables. Drillers often remember the van but undercount cores, segments and re-tip charges, which can be the single largest expense line.
Mixing labour and materials on invoices. Itemise materials separately so CIS is only deducted from labour, not from the cores you supply.
Assuming the bank balance is the profit. The figure left after CIS is not your profit and not your tax base; profit is gross income minus expenses, which is usually much lower.
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