Foundation Driller
Tax & MTD Guide

Foundation and screw-pile drilling is hard, capital-heavy, weather-beaten work, and the tax picture reflects that. You might be boring for screw piles on a rural plot one week, sinking groundsource boreholes the next, and casing out an unstable foundation hole after that, mostly invoicing main contractors and groundworks firms rather than the people who actually own the building. That means the Construction Industry Scheme (CIS) sits at the centre of your tax life, and your real costs, the rig, the fuel, the augers and the safety kit, are what turn an alarming gross figure into a fair tax bill.

This guide is built around how a driller actually earns and spends: CIS deductions and the refund they usually trigger, the specific plant, vehicle and consumable costs you can claim, the difference between everyday expenses and capital allowances, National Insurance, the VAT reverse charge that catches out so many groundworkers, and the MTD timetable now bearing down on the trade.

How Tax Works for a Self-Employed Driller

As a sole trader you pay Income Tax on profit, which is your total drilling income minus allowable expenses, not on the gross labour your contractor pays. 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 now 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 drillers have a C-coded tax code at rates currently matching the rest of the UK. If your code looks wrong, perhaps because CIS deductions or a previous PAYE job have confused HMRC's figures, run it through the tax code checker.

CIS: The Heart of a Driller's Tax

Almost all foundation, piling and groundworks labour is "construction operations" under CIS, so when a main contractor or groundworks firm pays you, they verify you with HMRC and deduct tax from your labour before it reaches your account. Register as a subcontractor and the rate is 20%; fail to register and it jumps to 30%, so registering is the first thing every new driller should do.

The crucial point is that the 20% comes off your gross labour with no credit for the fuel you burned getting the rig to a muddy plot, the augers you wore out, the PPE you replaced or the van that hauled it all. You are only ever taxed on profit, and you get GBP 12,570 tax-free, so the tax actually due is almost always less than what was deducted. That gap comes back to you as a refund. Our full CIS subcontractor guide walks through registration, deduction statements and verification in detail, and the CIS tax calculator estimates the refund from your own figures.

Keep every CIS deduction statement your contractors give you. Those statements are your proof of tax already paid, and without them you cannot reclaim the overpayment. Drillers who work for several contractors in a year, common when you are chasing piling and borehole jobs across sites, need to gather a statement from each one.

Allowable Expenses for a Foundation Driller

An expense is allowable when incurred wholly and exclusively for the business. Drilling is plant-heavy and fuel-heavy, so this list matters far more to a driller than to most trades, and getting it right is what drives your refund.

Capital Allowances for Big Kit

The split that catches drillers out is the difference between an everyday expense and a capital asset. Hiring a rig for a job is a running cost you deduct straight away. Buying a tracked auger rig, a compressor, a grout pump or a tipper outright is capital expenditure, claimed through capital allowances rather than as an ordinary expense.

In practice you usually claim the full cost in the year of purchase using the Annual Investment Allowance, which covers plant and machinery up to a generous limit and includes most drilling rigs and ancillary kit. A van or pickup bought for the business also qualifies as plant for capital allowances. The effect is similar to a normal expense, but it is reported differently on your return, and financing a rig on hire purchase has its own rules where the interest is an expense and the asset goes through capital allowances.

Vehicle Costs: Mileage or Actual

Hauling a rig, augers and crew around the country means real vehicle costs. You can either claim HMRC's flat mileage rate (45p a mile for the first 10,000 business miles, then 25p) or claim the actual business proportion of fuel, insurance, road tax, servicing and repairs plus capital allowances on the vehicle. For a driller running a heavy pickup towing plant, the actual-cost method often wins because the running costs are high, but you must pick one method per vehicle and stick with it. Ordinary commuting from home to a regular base is not allowable; travel to varying sites generally is.

What You Cannot Claim

The private share of dual-use fuel, phone and vehicle costs must be excluded. Everyday clothing worn under your hi-vis is not allowable even though only the protective gear is. Fines and penalties, for example a parking ticket on site, are never deductible. And materials your contractor supplies and deducts from your CIS payment are not your cost to claim.

Worked Example: A Driller on GBP 62,000 Gross Labour

Take a self-employed foundation driller invoicing main contractors for GBP 62,000 of labour across the year, all under CIS at 20%.

CIS deducted at source: GBP 62,000 at 20% = GBP 12,400 already paid to HMRC

Allowable expenses:

• Rig and compressor hire across the year: GBP 9,000
• Augers, bits, casings and grout consumables: GBP 4,500
• Pickup fuel, insurance, tax and repairs (business share): GBP 5,200
• PPE, boots and wet-weather gear: GBP 600
• Plant, tool and public liability insurance: GBP 1,400
• CPCS renewal and safety tickets: GBP 400
• Phone, software and accountancy: GBP 900
• Total expenses: GBP 22,000

Taxable profit: GBP 62,000 minus GBP 22,000 = GBP 40,000

Income Tax: GBP 40,000 minus GBP 12,570 = GBP 27,430 at 20% = GBP 5,486

Class 4 NIC: GBP 27,430 at 6% = GBP 1,646

Total Income Tax and Class 4 NIC due: GBP 7,132. Because GBP 12,400 was already deducted under CIS, the driller is owed a refund of roughly GBP 5,268 (before Class 2 NIC and any payments on account). Run your own day rates and costs through the sole trader tax calculator or the dedicated CIS calculator to estimate your position.

National Insurance for Drillers

Two classes of NIC apply. Class 4 is the big one: 6% on profit between GBP 12,570 and GBP 50,270, then 2% on profit above GBP 50,270, collected through Self Assessment. Class 2 NIC is also settled through your return; if your profits are above the small-profits threshold it is treated as paid and protects your State Pension and benefit entitlement, which matters in a trade where injury can stop you working. Even in a lean year it can be worth paying Class 2 voluntarily to keep your contribution record intact.

VAT and the Reverse Charge

You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period, and a busy driller charging strong day rates and plant can reach that. Once registered, the domestic reverse charge for construction is critical. When you invoice another VAT-registered contractor for foundation or groundworks labour under CIS, you do not add VAT to the invoice; you note that the reverse charge applies and the contractor accounts for the VAT to HMRC. You still reclaim the VAT on your own costs, fuel, rig hire, consumables and equipment, which often leaves you in a repayment position.

The reverse charge does not apply when you invoice an end client, such as a homeowner having groundsource piles installed, where you charge VAT in the normal way. Getting this wrong, by charging VAT to a contractor when you should not, is one of the most common errors in groundworks, so confirm each client's status before you invoice.

MTD for Income Tax: What Changes for Drillers

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 on gross income, not profit:

• April 2026: Combined gross self-employment and property income over GBP 50,000
• April 2027: Over GBP 30,000
• April 2028: Over GBP 20,000

This catches more drillers than they expect, because the test is on turnover. If your contractor statements add up to more than GBP 50,000 of gross labour, you are in from April 2026 even though CIS already took 20% and your profit is far lower. Instead of bagging up a year of deduction statements each January, you will record income and costs digitally as jobs complete and send HMRC a quarterly summary. The upside is that your CIS refund position becomes visible through the year rather than a once-a-year surprise. Our guide to MTD for sole traders shows what the quarterly rhythm looks like in practice.

Common Mistakes Foundation Drillers Make

Treating CIS as the final tax. The 20% is a payment on account, not your bill. File your return, claim your expenses, and reclaim the overpayment.

Losing CIS deduction statements. Each contractor's statement is your proof of tax paid. No statement, no refund for that work.

Confusing rig hire with rig purchase. Hired plant is an instant expense; a purchased rig goes through capital allowances. Recording them the same way distorts your profit.

Charging VAT to a contractor under the reverse charge. If you are both VAT-registered and the work is under CIS, the contractor accounts for the VAT, not you. Adding it to the invoice is a common and costly error.

Skipping Class 2 NIC in a quiet year. In a physical trade, protecting your State Pension and sickness entitlement is worth the small voluntary payment when profits dip.

People also ask

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Does the VAT reverse charge apply to piling and groundworks?

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