Underpinning Specialist
Tax & MTD Guide
CIS deductions and refunds, allowable plant, tool, vehicle and PPE expenses, National Insurance, the VAT reverse charge and MTD for self-employed underpinning specialists.
Estimate your tax as a self-employed underpinning specialist
Adjust the figures to see your estimated Income Tax and Class 4 National Insurance for the year.
Total turnover before expenses
Under £1,000 we use the trading allowance automatically
Estimated tax bill
£5,312
11.5% effective rate for 2026/27
- Income tax
- £4,086
- Class 4 NI
- £1,226
Take-home pay
£27,688
after tax, NI and expenses
This is an estimate using GOV.UK rates for 2026/27, not your official tax calculation. TapTax is MTD-compatible, so you can connect to HMRC and file the real figures in a couple of taps.
- Underpinning is a CIS trade: contractors deduct 20% from your labour before you see it, which usually leaves you owed a Self Assessment refund once tools, plant hire and vehicle costs are claimed.
- It is plant and equipment heavy. Excavator and pump hire, props, shoring, mixers and breakers are big deductible costs, alongside materials you buy yourself like cement, rebar and shuttering ply.
- Keep the CIS deduction figure from every payment and deduction statement: that number is the tax already paid on your behalf and is what generates your refund.
- From April 2026 MTD for Income Tax bites above £50,000 gross, April 2027 above £30,000 and April 2028 above £20,000, tested on gross turnover before CIS, not profit.
- If you are VAT-registered and invoicing another VAT-registered contractor, the domestic reverse charge usually applies so you do not add VAT to the invoice.
Underpinning is hard, physical, high-stakes work: excavating beneath an existing foundation, shoring the trench, and pouring concrete to take a building's weight back down to firm ground. The tax position of a self-employed underpinning specialist is shaped by two things almost no office-based trade has to think about. First, you are almost always inside the Construction Industry Scheme, which means money is deducted from your pay before it reaches you. Second, your costs are dominated by plant, materials and a working vehicle rather than a laptop and a desk.
Get those two things right and your Self Assessment usually ends with HMRC paying you back. This guide covers how your profit is taxed, the specific expenses that apply to deep groundwork and footing repair, the records to keep on every job, National Insurance, VAT and the reverse charge, and when Making Tax Digital starts for you.
How Tax Works for a Self-Employed Underpinner
As a sole trader you pay Income Tax on profit, which is everything your contractors paid you (gross, before any CIS deduction) minus your allowable expenses. For 2026/27 the personal allowance covers the first £12,570, then you pay 20% up to £50,270, 40% to £125,140 and 45% above. The personal allowance tapers away between £100,000 and £125,140, creating an effective 60% band in that zone. Class 4 National Insurance is 6% on profit between £12,570 and £50,270 and 2% above, and Class 2 NIC is settled through Self Assessment.
The crucial point is that CIS deductions come off your gross labour, not your profit. So a contractor might pay you £30,000 of labour for the year, deduct £6,000 under CIS, and hand you £24,000. HMRC has already had £6,000 of your tax. When you file and deduct your van, plant hire and tools, your actual tax and NIC are often well below that £6,000, and the balance comes back as a refund.
Scottish underpinners pay Scottish Income Tax through six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) on an S-prefixed tax code, while National Insurance stays UK-wide. Welsh workers carry a C-coded tax code at rates currently matching the rest of the UK. If you also have a PAYE job, perhaps labouring on the books for one firm and subcontracting for others, your code can easily end up wrong; run it through the tax code checker so you are not taxed twice on the same allowance.
CIS: The Heart of Your Tax Position
The Construction Industry Scheme governs how you are paid. The contractor you work for is required to deduct tax from the labour element of your invoices and send it to HMRC. If you are registered with CIS the rate is 20%; if you are not, it jumps to 30%, so registering is worth real cash flow every month. The deduction applies to labour only, not to materials or plant hire you have separately invoiced, which is one reason itemising your invoices matters.
- CIS deduction statement
- A monthly statement (sometimes called a payment and deduction statement or CIS voucher) that every contractor must give you. It shows the gross amount paid, the cost of any materials, and the amount deducted under CIS. These statements are the evidence HMRC uses to credit the tax already paid on your behalf, so keep every one. Add up the deductions across the tax year and that total is what offsets your Income Tax and Class 4 NIC bill, usually producing a refund for a subcontractor with normal expenses.
Because underpinning is labour-intensive but also carries heavy plant and material costs, the gap between what is deducted and what you actually owe is often large, which is exactly why a refund is the norm. Our full breakdown of how the scheme works for subcontractors lives at CIS for subcontractors, and you can model your own refund with the CIS tax calculator.
| CIS situation | Deduction from labour | What it means |
|---|---|---|
| Registered subcontractor | 20% | Standard position; usually a refund at year end |
| Not registered | 30% | Higher deduction, bigger refund but worse cash flow |
| Gross payment status | 0% | Paid in full, settle all tax via Self Assessment |
Allowable Expenses for Underpinning Specialists
An expense is allowable when it is incurred wholly and exclusively for the business. Unlike a desk-based trade, your deductions are dominated by plant, materials and a working vehicle. Capturing them properly is what turns the CIS deductions into a refund.
| Expense | What qualifies | Notes |
|---|---|---|
| Plant and equipment | Cement mixers, breakers, acrow props, trench shoring boxes, pumps, generators, compactors | Owned plant via the Annual Investment Allowance; hire is fully deductible |
| Plant hire | Mini-diggers, excavators, dumpers, concrete pumps, dewatering pumps | Keep every hire invoice; often a large line item |
| Hand tools and consumables | Shovels, trowels, drills, saw blades, shutter pins, fixings | Replaceable kit is deductible; durable plant may be AIA |
| Materials you buy | Cement, ballast, rebar, shuttering ply, grout, mass concrete | Deduct when you fund them; bill separately so they sit outside the CIS deduction |
| PPE and protective clothing | Hard hats, steel toe boots, hi-vis, gloves, knee pads, respirators, ear defenders | Genuine protective gear is allowable; everyday clothing is not |
| Vehicle | Van running costs and fuel, or HMRC mileage at 45p/25p per mile | Pick one method per vehicle and stick to it for the year |
| Insurance | Public liability, plant and tool cover, employer's liability if you use labour | Fully deductible business insurance |
| Scheme and trade costs | CITB levy, CSCS card, SMSTS/health and safety tickets, trade memberships | Cards and tickets that keep you working are allowable |
| Admin and home office | Phone, accountancy, bank charges, quoting and invoicing software, flat-rate home office | Use the simplified flat rate or a fair proportion of actual costs |
Plant, Tools and the Annual Investment Allowance
Buying your own breaker, mixer or set of shoring props is capital expenditure, but the Annual Investment Allowance lets you deduct the full cost in the year you buy, up to a generous limit that no solo underpinner will hit. Hiring plant is simpler still: an excavator, dumper or concrete pump hired for a job is a straight running cost, deducted in full. Either way, keep the invoice. Plant hire on a deep underpinning job can run to thousands in a single week, and missing those invoices is the fastest way to overpay tax.
Vehicle Costs
You need a van or truck to carry tools, props and materials between sites. You can claim either actual running costs (fuel, insurance, servicing, repairs, the business share of the purchase via capital allowances) or the simplified mileage rate of 45p per mile for the first 10,000 business miles and 25p after that. The simplified method needs only a mileage log and suits most sole traders; heavy commercial vehicles with high fuel and maintenance bills sometimes do better on actuals. Ordinary commuting to a regular base is not allowable, but travel between sites and to suppliers is.
What You Cannot Claim
The private share of your phone, van and dual-use items must be stripped out. Everyday clothing is never allowable, even rugged workwear, although genuine PPE and branded uniform are. Fines, parking penalties and the cost of your own lunch on site are not deductible. And materials a contractor supplied and paid for are not yours to claim.
Record-Keeping on Every Job
Underpinning records have one extra layer over a normal trade: the CIS paper trail. Keep your monthly deduction statements, your sales invoices (ideally splitting labour, materials and plant hire so the CIS deduction is applied correctly), and every purchase and hire receipt. Photograph receipts at the merchant counter before they fade. A simple rule that saves underpinners a fortune: never throw away a deduction statement, because that is the document proving tax was already paid on your behalf.
For an underpinning specialist, the refund lives in two piles of paper: your CIS deduction statements, which prove the tax already paid, and your plant and material receipts, which prove your real costs. Lose either and you overpay.
Worked Example: An Underpinner on £52,000 Gross
Take a registered underpinning subcontractor paid £52,000 of labour across the year, with the usual plant and material outlay.
Gross labour: £52,000 (CIS deducted at 20% = £10,400 already paid to HMRC)
Allowable expenses:
- Plant hire (digger, dumper, concrete pump): £9,000
- Owned plant and tools (AIA): £3,000
- Materials funded directly: £4,500
- Van running costs and fuel: £3,200
- PPE, CSCS, CITB and insurance: £1,400
- Phone, accountancy and admin: £900
- Total expenses: £22,000
Taxable profit: £52,000 minus £22,000 = £30,000
Income Tax: £30,000 minus £12,570 = £17,430 at 20% = £3,486
Class 4 NIC: £17,430 at 6% = £1,046
Total tax and NIC due: £4,532. But HMRC already holds £10,400 from CIS deductions, so this underpinner is owed a refund of roughly £5,868. Run your own figures through the CIS tax calculator or the sole trader tax calculator to estimate yours before you file.
VAT and the Domestic Reverse Charge
You must register for VAT once taxable turnover passes £90,000 in any rolling 12-month period. Many established underpinning specialists working off-the-books labour plus materials reach this, so watch your rolling total. Once registered, the construction industry has a special rule: the VAT domestic reverse charge. If you supply CIS construction services to another VAT-registered contractor who is not the end user, you do not charge VAT on your invoice. Instead the contractor accounts for it on their own return. Your invoice must state that the reverse charge applies and show the VAT rate that would have applied.
You still reclaim VAT on your own purchases of plant, hire and materials, which for an equipment-heavy trade is worth having. The reverse charge does not apply when you work directly for an end user, such as a homeowner having their Victorian terrace underpinned, where you charge VAT in the normal way. Getting this wrong is a common construction error, so flag every invoice clearly.
MTD for Income Tax: What Changes
Making Tax Digital for Income Tax replaces the annual return with quarterly digital updates and a year-end finalisation. The thresholds are based on gross income before CIS deductions and before expenses:
- April 2026: Combined self-employment and property income over £50,000
- April 2027: Over £30,000
- April 2028: Over £20,000
Because the test is on gross turnover, an underpinner billing £52,000 of labour is in scope from April 2026 even if profit after plant and materials is far lower. The practical shift is recording each invoice, deduction statement and plant receipt digitally as it happens rather than stuffing a year of paperwork into a January panic. For a CIS trade that is no bad thing: keeping the deduction figures current makes your refund quicker to calculate. Our guide to MTD for sole traders walks through the quarterly rhythm in plain terms.
Common Mistakes Underpinning Specialists Make
Binning CIS deduction statements. Those statements are your proof of tax already paid. Lose them and you risk losing the refund they unlock.
Not registering for CIS. Staying unregistered means 30% deducted instead of 20%, starving your cash flow all year for no reason.
Forgetting plant hire invoices. A week of excavator and pump hire is a large deduction. Miss it and you hand tax to HMRC you do not owe.
Charging VAT when the reverse charge applies. Invoicing a VAT-registered contractor with VAT added, when the reverse charge should apply, creates errors for both of you.
Claiming everyday clothing. Tough work trousers are not allowable; only genuine PPE and branded uniform are.
People also ask
Underpinning specialist income and Making Tax Digital
If you work for yourself, Making Tax Digital for Income Tax applies to you from 6 April 2026 if your qualifying income is over £50,000, and from 6 April 2027 if it is over £30,000. TapTax keeps your digital records and sends your quarterly updates to HMRC, and it is MTD-compatible.
Start freeQuarterly expenses under MTD: the £90,000 rule
If your annual business turnover is £90,000 or less, HMRC lets you report a single consolidated expenses total in each Making Tax Digital quarterly update instead of breaking expenses down into itemised categories. Most self-employed underpinning specialist businesses are under this threshold, so a quarterly update can be as simple as two figures: total income and total expenses. You still need to keep digital records of each individual expense - the relaxation only changes how much detail goes into the quarterly update itself.
Related calculators and guides
More self-employed tax guides
Frequently asked questions
Why do I usually get a tax refund as an underpinning subcontractor?
Under the Construction Industry Scheme, contractors deduct 20% from your labour payments (30% if you are not registered) and pass it to HMRC as an advance on your tax. That deduction is taken from your gross labour before any expenses. Once you file Self Assessment and claim your tools, plant hire, vehicle and other costs, your real tax bill is usually lower than the CIS already paid, so HMRC refunds the difference. Most underpinning specialists are owed money each year.
What expenses can a self-employed underpinning specialist claim?
You can claim plant and equipment such as mixers, props, trench shoring and breakers, hire of excavators and pumps, hand tools, PPE and protective clothing, materials you buy yourself like cement, rebar and shuttering ply, van running costs or mileage, public liability insurance, CITB and scheme fees, phone, accountancy and a fair share of home-office admin costs. Anything bought wholly and exclusively for the work is allowable; private use must be excluded.
Does the VAT reverse charge apply to underpinning work?
Yes. If you are VAT-registered and working for another VAT-registered contractor on construction services covered by CIS, the domestic reverse charge usually applies. You do not charge VAT on your invoice; instead the contractor accounts for it. Your invoice must state that the reverse charge applies and show the VAT rate. You still reclaim VAT on your own purchases. The reverse charge does not apply to end users such as a private homeowner, where you charge VAT normally.
When does MTD for Income Tax apply to me?
Making Tax Digital for Income Tax starts from April 2026 if your gross self-employment and property income is over £50,000, from April 2027 over £30,000, and from April 2028 over £20,000. The test is on gross turnover before CIS deductions and before expenses, so use the total your contractors paid you, not your profit. From your start date you keep digital records and send HMRC quarterly summaries with compatible software, then finalise the year.
Should I register for the Construction Industry Scheme?
Yes. If you do construction work as a subcontractor you should register for CIS with HMRC. Registered subcontractors have 20% deducted from labour payments; unregistered ones have 30% deducted, so registering keeps more cash in your hands through the year. Registration is separate from registering as self-employed for Self Assessment, and you should do both. If your records are clean you can later apply for gross payment status and receive payments with no deduction at all.
Sources
Official guidance on GOV.UK.