Managing a limited company in the construction sector involves a wide range of expenses, from purchasing materials and tools to covering travel and insurance costs. These expenses can quickly add up, impacting your finances. Under the Construction Industry Scheme (CIS), many of these costs are eligible for tax deductions, which can help reduce your Corporation Tax bill.
In this blog, we’ll explore the top 10 expenses your company can claim under the CIS, along with practical tips to help you maximize your tax savings.
1. Materials and Consumables
Materials and consumables are key expenses that can be claimed under the Construction Industry Scheme (CIS). These include the building materials directly purchased to complete a construction job, such as bricks, cement, timber, plaster, wiring, pipes, fittings, screws, nails, adhesives, and other job-specific supplies. As long as these materials are used solely for business purposes, they are fully allowable. To claim these costs, keep receipts and invoices that clearly list the materials bought and prove they are for your work. Only claim materials used exclusively for business, not for personal or unrelated use.
2. Tools and Small Equipment
Tools and equipment used on construction jobs are generally allowed as business expenses under the Construction Industry Scheme (CIS). This includes things like drills, saws, spanners, hammers, screwdrivers, power tools, chargers, measuring tools, and other general site equipment. As long as these tools are used for the work you’re doing, you can claim them. Small tools used up or replaced within a year can be claimed as expenses. Larger equipment must be claimed as capital allowances, spreading the cost over several years.
3. Plant and Machinery Hire
Hiring plant or machinery for a construction job, instead of buying it, is common and can help reduce upfront costs. You can claim the hire costs for equipment like diggers, excavators, cement mixers, scaffolding, dumpers, and rollers as allowable expenses under the Construction Industry Scheme (CIS). The hire must be from a third-party supplier; you cannot claim if you own the equipment. If the hire includes an operator, the cost counts as a labor expense, not plant hire.
4. Vehicle and Travel Costs
If you use a vehicle for business purposes, you can claim expenses such as fuel, repairs, servicing, road tax, insurance, parking fees, MOT tests, or mileage at HMRC’s approved rate. These costs are deductible as long as the vehicle is used for business activities, such as travelling to temporary work sites. You cannot claim travel from home to your regular workplace. Travel to a temporary job site is fully claimable. If you use a vehicle for both work and personal use, only the work-related part can be claimed.
5. Protective Clothing and PP
Any safety equipment required for your job is deductible. This includes high-visibility jackets, steel-toe boots, helmets, gloves, goggles and kneepads. Everyday clothing doesn’t qualify, but essential protective gear does.
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6. Insurance
Most contractors need insurance to work legally. You can claim the costs for business-related insurance, including public liability insurance, employer’s liability insurance, professional indemnity insurance, and business vehicle insurance. These are essential for your business operations and are fully tax-deductible. Make sure your insurance is for business use only. If it covers both personal and business, only claim the business part. Keep records of your insurance costs to claim correctly.
7. Subcontractor and Labour Costs
If your limited company hires additional workers, you can claim subcontractor payments, agency labour costs and the CIS deductions you pass on to HMRC. Make sure that all payments are properly supported with invoices and CIS statements.
8. Training and Certification
Construction roles often require specialist training. You can claim expenses for training courses such as CSCS cards, health and safety certifications, first-aid courses, and trade-specific qualifications like electrical or scaffolding training, as long as they are directly needed for your business.
You can only claim training costs if the training relates to your current job and helps maintain or improve your skills. Training for new skills or a different trade usually cannot be claimed
9. Office and Admin Costs
Even the most hands-on construction companies need admin support. You can claim accountancy fees, phone and internet bills, software subscriptions, office rent or a reasonable portion of home-office costs. These expenses help keep your business running smoothly behind the scenes.
10. Professional Fees, Licences and Finance Costs
You can claim expenses for professional fees that are necessary for your business, including legal fees, trade memberships, business licences, and registrations. These are considered valid business costs as long as they are directly related to running your company. You can claim bank fees, loan interest, and finance charges if they are for your business. If these costs are partly personal, only claim the business part. Keep clear records and make sure all costs are necessary for your business.
Final Thought
Knowing what expenses your limited company can claim under CIS helps you save money, reduce your tax bill and run your business more efficiently. The key is to keep clear records, claim everything you are entitled to and stay on top of your accounts throughout the year. With the right guidance, you can maximize your savings and avoid costly mistakes. Get in touch with Cartwheel International for a free consultation and take control of your project finances today.
