Many tradespeople move between employed (PAYE) and self-employed (CIS) work over a career, often more than once. Here’s what actually changes.
How you’re paid
Under CIS (Construction Industry Scheme), the contractor deducts tax at source (usually 20% if registered, 30% if not) before paying you, and you settle the balance — or claim a refund — through a Self Assessment tax return. There’s no automatic holiday pay, sick pay, or pension contribution from the contractor.
Day rate vs salary
A day rate looks higher than an equivalent salary on paper, but it needs to cover the weeks you’re not on a site, your own tools and PPE, van costs, insurance, and no paid leave — compare like-for-like before assuming it’s simply “more money.”
Registering for CIS
Register with HMRC as a subcontractor before starting self-employed work, so contractors deduct at 20% rather than the higher 30% unregistered rate.
Keeping records
Since expenses, mileage and CIS deductions all affect your tax return, most self-employed tradespeople keep a simple ongoing log rather than trying to reconstruct a year’s paperwork in January — an accountant familiar with CIS is a worthwhile cost for most contractors.