Tax for electricians: CIS, expenses and what you actually owe
Reviewed by Rob Webb, practising accountant since 2015 · Last reviewed September 2026 · Figures are for the 2026/27 tax yearReviewed by Rob Webb, practising accountant since 2015 · Last reviewed September 2026 · Figures are for the 2026/27 tax yearWork for yourself as an electrician? You file a tax return. You pay nothing on the first £12,570 of profit, then 20% income tax plus 6% National Insurance.
Working under CIS? Contractors take 20% off your labour as you go, and it comes off your bill at the year end. Getting money back is normal. It doesn't mean something has gone wrong.
Want to check your own costs? See what you can claim as an electrician →
If you invoice for your work, provide your own tools and van, and decide which jobs to take, you are self-employed. That is true whether you work directly for householders, subcontract to a main contractor under CIS, or do both.
Register with HMRC by 5 October after the end of the tax year you started in. If you also want to work under CIS, register separately as a subcontractor — it is a different registration, and getting it done drops the deduction rate from 30% to 20%.
The trading allowance gives £1,000 of gross trading income tax free, so a genuinely occasional job or two need not be reported. It is measured on gross income before materials, which for electrical work means very few people fall under it. An increase to £3,000 has been announced, but no start date has been confirmed.
Being inside CIS does not remove the filing obligation. CIS deductions are payments on account of your tax, not a final settlement, and the only way to reconcile them is to file.
Under CIS, the contractor you invoice deducts tax from the labour part of your invoice before paying you and hands it to HMRC on your behalf. The rate is 20% if you are registered as a subcontractor, 30% if you are not, and 0% if you hold gross payment status.
Three points decide whether you get this right.
First, the deduction is taken from labour only. Materials you have supplied, and plant hire, are excluded. So your invoices must split labour and materials clearly. If they do not, a contractor may deduct across the whole invoice and you lose the use of that cash for a year.
Second, you still report gross turnover on your return — the full invoice value, before any CIS was taken — and you claim your expenses in the normal way. The CIS suffered is then set against the tax and Class 4 NI you have worked out. It is not an expense and it is not a reduction in turnover.
Third, keep every payment and deduction statement the contractor gives you. Under Making Tax Digital, HMRC pre-populates your CIS deductions at finalisation, but you need your own statements to check theirs.
If your turnover is steady and your compliance record is clean, gross payment status is worth applying for. It removes the deductions entirely and you settle everything once a year instead of lending HMRC money all year.
Here is a year for an electrician doing a mix of contractor work under CIS and direct work for householders.
| Line | Amount |
|---|---|
| Turnover — CIS contractor work (gross) | £48,000 |
| Turnover — direct domestic work | £14,000 |
| Total turnover | £62,000 |
| Materials and consumables | £13,500 |
| Van fuel, servicing and repairs | £4,900 |
| Van insurance | £860 |
| Tools and test equipment | £1,450 |
| Calibration and PAT testing | £320 |
| Competent person scheme membership | £680 |
| Public liability insurance | £540 |
| Protective clothing and boots | £210 |
| Phone and internet (business share) | £420 |
| Accountancy | £300 |
| Total expenses | £23,180 |
| Profit | £38,820 |
| Less personal allowance | £12,570 |
| Taxable profit | £26,250 |
| Income tax at 20% | £5,250.00 |
| Class 4 NI at 6% | £1,575.00 |
| Total liability | £6,825.00 |
| Less CIS deducted (20% of £36,000 labour) | £7,200.00 |
| Repayment due to you | £375.00 |
The labour element of the CIS work was £36,000 of the £48,000, with £12,000 of materials that the contractor correctly excluded from the deduction. Because the deductions were taken from labour at 20% while the effective rate on profit is lower once expenses are allowed, the year ends in a repayment. That is the usual pattern for a subcontractor with real costs, and it is why filing early in the tax year is worth doing — the repayment arrives sooner.
| What you can claim | What to watch |
|---|---|
| Cable, consumer units, accessories and consumables | If you recharge materials to a contractor, the recharge is turnover and the purchase is an expense. Do not net them off |
| Test equipment: multifunction testers, clamp meters, insulation testers | Higher-value kit is capital and goes through capital allowances rather than straight to expenses |
| Annual calibration of test instruments | Fully allowable and often forgotten because the invoice is small |
| Competent person scheme membership and assessment fees | The annual assessment visit as well as the subscription |
| 18th Edition, AM2 and other qualification updates | Allowable where it updates existing skills. A first qualification that gets you into the trade is not |
| Van running costs, or mileage at 55p then 25p | One basis per vehicle, and you must stay on it for that vehicle. Flat rate blocks capital allowances on it |
| Van racking, ladder rack and security locks | Racking fitted to a van is usually capital; a replacement lock is a repair |
| Public liability and tools-in-transit insurance | Tools insurance is easy to overlook because it often sits inside a household policy — only the business part is claimable |
| Certification software and notification fees | Per-certificate notification charges add up over a year |
| Protective clothing, boots, gloves, arc-rated kit | Protective and branded workwear only. Ordinary jeans and t-shirts are not allowable |
| Working from home for quoting and paperwork | £10 a month for 25–50 hours, £18 for 51–100, £26 for 101+. Phone and internet claimed separately |
| Subcontractors you pay | If you pay another subcontractor for construction work you become a contractor and have CIS obligations of your own |
Reporting CIS income net of the deduction.
It is an easy mistake. The contractor's statement shows £2,400 labour, £480 deducted, £1,920 paid. The £1,920 hits the bank, so £1,920 goes in the books. Do that all year and your turnover is understated by 20% of your labour, your profit is wrong, and the CIS credit you are owed never gets claimed — so you pay tax you have already paid.
The fix is mechanical. Turnover is the gross invoice value. The deduction is recorded separately as CIS suffered. Both figures are on every payment and deduction statement.
There is a second consequence under Making Tax Digital. Qualifying income is tested on gross turnover, so a subcontractor who works from net figures can genuinely believe they are under £50,000 when their gross turnover is above it. That is a missed start date and a points penalty for something that was only ever a bookkeeping habit.
Your start date is set by qualifying income — gross self-employment turnover plus gross property income added together, before expenses — on the previous year's return. Over £50,000 tested on the 2024–25 return meant joining on 6 April 2026. Over £30,000 on the 2025–26 return means joining on 6 April 2027. Over £20,000 on the 2026–27 return means joining on 6 April 2028.
The electrician above has £62,000 of gross turnover. They are already inside Making Tax Digital for 2026/27 and are filing quarterly updates now. Their deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027, with the final declaration on 31 January 2028.
Each update is cumulative, covering from 6 April to the end of that period rather than the quarter alone. Records must be kept in compatible software and held for at least five years after the 31 January deadline. Under £90,000 of turnover you may report income and expense totals only. At finalisation HMRC pre-populates CIS deductions, employment income, pensions, state benefits and residential capital gains, so much of the reconciliation is done for you — but check it against your own statements.
Late submission inside Making Tax Digital is points-based: one point per miss, £200 at four points, £200 for each miss thereafter, and points expire after 24 months if you stay below the threshold. Late payment is nothing up to 15 days, 3% at day 15 and a further 3% at day 30, then interest at 10% annualised charged daily from day 31.
If all your work is direct for householders, you have no CIS, one van and a shoebox of receipts, HMRC's free online return will handle it and you do not need to pay for help.
If you have already been granted gross payment status, your records are on software, and you are comfortable with the quarterly rhythm, you may simply not need an agent.
If you trade through a limited company, this guide is not for you — the company files corporation tax returns and accounts at Companies House, which is a different service.
And if a contractor has deducted CIS but never paid it over to HMRC, or you are in a dispute about your employment status on a site, that is a specialist matter. Take it to someone who handles status and CIS disputes rather than a filing service.
Because CIS deducts 20% from your labour without any allowance for your personal allowance or your expenses. Once the £12,570 allowance and your materials, van and tools are taken into account, your real liability is usually less than what was deducted. The difference comes back.
No. The deduction applies to labour only, with materials and plant hire excluded. Show them separately on every invoice so the contractor can apply the deduction correctly, and keep the supplier receipts to support the split.
It removes the 20% deduction entirely and improves your cash flow across the year, which matters if you carry materials cost. The trade-off is that you must keep your own filing and payment record clean, because the status depends on it. You still file the same return.
Usually yes, at its market value when you brought it into the business rather than what you originally paid. Keep a note of the item, the date you started using it for work and how you arrived at the value.
It adds payroll. You need a PAYE scheme, you report each payday under Real Time Information, and the wages and employer's National Insurance become expenses in your accounts. Your own Self Assessment position is otherwise unchanged.
Inside Making Tax Digital you get a penalty point rather than an immediate fine. At four points you are charged £200, and £200 for each further miss. Points drop off 24 months after the missed deadline provided you stay below the threshold.
Filed Tax prepares and files returns for electricians, including CIS reconciliation and repayment claims. Send us your deduction statements and your costs. £25 a month covers all four Making Tax Digital quarterly updates, the year-end final declaration, unlimited questions and deadline reminders, and the first month is free. Rob Webb reviews every return before it is filed.
Rob is a Certified Xero Advisor with a BSc from the University of Salford. Last reviewed September 2026 against GOV.UK guidance current at that date. This guide is general information, not personal tax advice. Figures are for the 2026/27 tax year and can change at each Budget — always confirm the current numbers on GOV.UK or ask us to check your situation.