How to start a trades business in the UK

Demand is stubbornly strong despite a cooler housing market: repair, maintenance and improvement (RMI) spend remains resilient and public‑sector retrofit work is expanding. Realistic 2026 labour day rates: electricians £220–£320, plumbers £200–£300, gas engineers £240–£350, general builders £220–£350, decorators £160–£220. London and the South East typically command 15–25% uplifts; major regional cities (Bristol, Manchester, Edinburgh) sit 5–10% above national medians. Annual take‑home hinges on utilisation: a sole‑trader electrician billing 180 days at £270/day grosses £48,600 on labour, often adding £35k–£60k of materials turnover if you supply. A two‑person plumbing/gas outfit running 360 billable engineer‑days at £285/day grosses c.£102,600 labour. Self‑employed earnings swing with weather, sickness and cancellations; owner‑operators who confirm jobs, collect deposits and keep travel tight stabilise margins. Main contractor packages can be pricier per hour but paid on 30–60 day terms and subject to retentions.

Your legal wrapper affects tax, admin and how main contractors treat you. Sole trader is simplest: register with HMRC for Self Assessment, keep proper records, and you can start under your own name. A limited company through Companies House creates a separate legal person, which many contractors prefer; it allows PAYE for yourself, potentially smoother indemnity and limited liability if something goes badly wrong. In construction you must also face the Construction Industry Scheme (CIS). If you are a subcontractor, register with HMRC for CIS to have 20% deducted on labour (30% if unverified). Apply for Gross Payment Status once you can evidence compliance and turnover; cashflow improves markedly when deductions stop. If you are a contractor (you hire subbies), you must verify every subcontractor with HMRC, withhold 20/30% on labour, file monthly CIS returns by the 19th and pay by the 22nd. Domestic homeowner work sits outside CIS; B2B construction supply chains sit within it.

Clients don’t care about framed certificates—until something goes wrong. Then regulators and insurers do. For electricians, the gold route remains NVQ Level 3 in Electrotechnical Installation (2357/5357), the 18th Edition BS 7671 (current Amendment 2) and City & Guilds 2391‑52 (inspection and testing). For plumbers, a Level 2/3 NVQ Diploma in Plumbing and Domestic Heating (6189/6035) is the foundation. Gas engineers require current ACS qualifications (e.g., CCN1, CENWAT) and evidence of competence in the appliances you work on; Gas Safe registration is mandatory to do gas work legally. Renewables installers targeting heat pumps or solar PV should add manufacturer courses plus MCS knowledge of MIS standards and consumer code membership. Across trades, an up‑to‑date CSCS card is the ticket onto many sites; take the CITB Health, Safety and Environment test and apply for the relevant skilled card. Inspection, testing and safe isolation are not optional—they’re what separates premium rates from call‑out money.

Regulatory paperwork is dull until you price it into your business and use it to win work. Gas engineers must be on the Gas Safe Register and only work within the categories on their card. Domestic electrical work in England and Wales falls under Building Regulations Part P: notifiable work must be signed off either by Local Authority Building Control or via a Competent Person Scheme (CPS). If you intend to fit heat pumps or solar PV and want customers to access the Boiler Upgrade Scheme (England & Wales), you need company‑level MCS certification and membership of an approved consumer code (e.g., RECC or HIES). Carrying away construction waste usually requires an Upper Tier Waste Carrier Licence with the Environment Agency (England) or equivalent devolved agencies. If you process customer data (quotes, emails, CCTV/dashcams), pay the ICO data protection fee. For school or care‑setting contracts, expect to provide enhanced DBS checks. Each of these has costs and audits—treat them as marketing assets once earned.

Electrical CPS membership signals competence and allows you to self‑certify notifiable domestic work under Part P. The main operators are NICEIC and NAPIT. The ELECSA brand has been consolidated into NICEIC; legacy ELECSA members migrated to NICEIC’s framework. Stroma’s installer certification activities were acquired and absorbed within the NAPIT Group; many still use the name colloquially, but new applicants join NAPIT or NICEIC. Membership fees vary by scope and turnover but expect c.£500–£750 in year one, including assessment. Gas Safe is the statutory register—not a CPS—sitting apart. For renewables, MCS certification is separate and more onerous: budget £2,000–£3,500 in year one including consultancy, audits and calibration, plus annual surveillance. Choose the body your target customers recognise locally; many main contractors ask for NICEIC Approved Contractor or NAPIT Full Scope, and public‑sector frameworks often demand third‑party accreditation plus SSIP like CHAS or SafeContractor.

Public liability (PL) of £2m is the entry ticket; £5m is increasingly standard on commercial or school work. Expect c.£120–£250 per year for £2m PL, and £200–£450 for £5m, varying by trade and claims history. Employers’ liability (EL) is a legal must if you employ anyone, minimum £5m by law but £10m standard; from c.£100–£250 per employee when bought in a combined policy. Tools cover insures theft from vehicles or sites (often excluded overnight unless “Thatcham‑approved” security); budget £10–£25 per month for £2,000–£5,000 cover. Contractors All Risks covers materials and works in progress; hired‑in plant cover is essential if you rent kit. Consider professional indemnity if you design, specify or sign off. Reputable UK brokers/insurers serving trades include Trade Direct Insurance, Rhino Trade Insurance and Simply Business (broker). Many main contractors require copies of PL/EL schedules and method statements before issuing a PO—treat certificates as sales collateral, not admin.

Your van is your billboard and your workshop. A Ford Transit Connect (small van) suits decorators/electricians who work light: new list prices typically start in the mid‑£20,000s + VAT; a Ford Transit Custom (medium van) fits plumbers/builders and starts in the low‑£30,000s + VAT depending on spec. Finance options: hire purchase (you own at term end; claim capital allowances—AIA for sole traders, full expensing for companies), lease (return/replace; rentals are deductible but you don’t own), or buy used outright. Monthly payments on a £30k+VAT van on HP over five years with 10% deposit often land around £450–£550 plus insurance. Signwriting ranges from £300 for basic decals to £1,200 for a full wrap; done well it pays for itself in a few jobs. Tooling budgets: decorators £1,000–£2,000; electricians £2,500–£4,000; plumbers £3,000–£6,000; gas engineers add £500–£1,000 for a flue gas analyser and calibration; builders £5,000–£8,000 including dust extraction, breakers and laser kit. Invest early in dust control and proper storage—downtime beats day rate every time.

There are only three models: day rate, fixed‑price quote, or time‑and‑materials (T&M). Day rates in 2026: £180–£350 depending on trade and region; they’re simple but cap upside on fast jobs. Fixed prices win homeowners’ trust and reward efficiency—quote labour plus materials with a transparent uplift (10–20% is common) and clear exclusions. T&M suits investigative or maintenance work where scope is unknown. Whichever you pick, systemise quotes, variations and sign‑offs. Software like Tradify, Powered Now and ServiceM8 runs at roughly £20–£50 per user per month and pays back in fewer missed invoices and tighter scheduling. Use price books and templates for common jobs (e.g., cooker circuit, combi swap, room redec) and send PDFs with terms, staged payments and a two‑week validity. Photograph pre‑existing defects and include them in the quote pack; it prevents debates at the end.

The numbers below assume you supply both labour and materials where appropriate. Electrician (sole trader): 190 billable days at £270/day = £51,300 labour. Materials on supplied jobs: £55,000 at 15% margin = £8,250 gross profit. Call‑outs/variations: £6,000. Annual gross income c.£65,550 before overheads. Overheads: van finance/insurance/fuel £8,000; PL/EL/tools insurance £700; CPS fees/Cal certs £650; software/phone £1,000; marketing (Checkatrade/ads) £1,800; accountancy £1,000; tools/depreciation £1,200; sundries/PPE £1,200. Overheads c.£15,550, leaving £50,000 before tax. You’ll breach the £90k VAT threshold if materials turnover grows—plan for VAT pricing. Two‑person plumbing & gas team (Ltd company): 360 billable days at £295/day = £106,200 labour. Materials turnover £90,000 at 12% margin = £10,800. Total gross c.£117,000. Overheads heavier: van x2 £13,000; insurances £1,400; Gas Safe/MCS/calibration £2,200; software/phones £2,400; marketing £2,400; rent/store £3,000; accountancy/payroll £2,500; tools £2,000; training £1,200. Overheads c.£30,000, leaving c.£87,000 pre‑tax to split across salaries/dividends and reinvestment. Profitability lives or dies on utilisation and materials margin discipline.

Winning work is only half the job; delivering it without drama is where reputation is built. Standardise your intake: answer within hours, triage with photos/video, and schedule site visits efficiently by postcode. Issue written RAMS for anything that would make the HSE twitch, and follow CDM 2015 duties on domestic jobs—yes, they still apply, even when the client is a homeowner. Build supplier credit early with merchants (CEF/Edmundson for electrical, City Plumbing/Wolseley for wet trades, Travis Perkins/Buildbase for builders). Thirty‑day EOM accounts smooth cashflow but need discipline. Keep a snag list running from day one; photograph stages, especially before covering up. Test, commission and hand over with certificates: EIC/EICR for electrical, Gas Safe Building Regulations notifications for boilers, MCS checklists for heat pumps, and manufacturer warranties registered before you leave site. Close with a dated final invoice, photos and care instructions—you’ll reduce call‑backs and ease retention releases.

You need a pipe of small jobs to cover overheads and a few larger packages for chunky margins. Early on, platforms help fill the diary: Checkatrade starter packages are commonly around £120 per month plus VAT; MyBuilder charges per lead; Rated People mixes subscription with credits. Convert that spend into Google reviews and a strong Google Business Profile—photos, service list, and service‑area focus. Local Facebook groups and WhatsApp streets are underrated if you show before/after pictures and real response times. To step up into larger packages, build a pre‑qualification pack: PL/EL certificates, RAMS examples, training matrix, CSCS cards, and where relevant SSIP (CHAS, SMAS or SafeContractor) and Constructionline Bronze/Silver. Expect PQQs to ask about environmental policy, waste carrier licence, DBS for school work, and previous contract references. Main contractors pay slower but keep you busy—negotiate staged payments and be wary of open‑ended “labour only” rates without minimums.

Write it down or watch margin leak away. For consumer work, use a clear letter of engagement or a JCT Home Owner/Consumer contract equivalent; for small commercial packages, JCT Minor Works (2024 suite) is the standard. Set out scope, programme, payment schedule, and variations. Take deposits (10–30%) for materials; agree staged applications on longer jobs. Under the Late Payment of Commercial Debts Act, you can charge statutory interest (Bank of England base plus 8%) and compensation; the Housing Grants, Construction and Regeneration Act 1996 (Construction Act) gives a right to interim payments and adjudication. Retentions of 3–5% are normal on contractor jobs; aim to reduce to 2.5% at Practical Completion with the balance after the defects period. Snag as you go, hold a pre‑completion walk‑through, and minute what remains. Never hand over certificates without at least a conditional payment agreement in writing; they’re your last leverage.

Three moving parts matter. VAT: register once taxable turnover passes £90,000 on a rolling 12‑month basis. In B2B CIS chains, the Domestic Reverse Charge shifts the VAT accounting to your VAT‑registered customer on most labour‑plus‑materials supplies; you invoice with “reverse charge—customer to account for VAT” and don’t charge VAT on those lines. Domestic work and end‑users are outside reverse charge. Income tax/corporation tax: personal allowance remains £12,570 in 2026; higher rate starts at £50,270, additional at £125,140. Companies pay 19% on small profits up to £50k and 25% main rate with marginal relief between. National Insurance for the self‑employed runs mainly through Class 4 on profits; employees’/employers’ Class 1 apply under PAYE. Making Tax Digital: VAT has been MTD for all since 2022; MTD for Income Tax starts April 2026 for sole traders and landlords with business income over £50,000 (quarterly updates via compatible software), extending to £30,000 in April 2027. Choose Xero, QuickBooks or FreeAgent and keep clean digital records.

The cheapest way to scale is to raise your day rate; the second is to add an apprentice so senior hands stay on value‑add work. The 2026 apprentice minimum rate is £7.55 per hour; budget on‑costs (holiday pay, tools, training time) and employer pensions. Employer NIC relief exists for apprentices under 25 within thresholds. Pick an approved standard (e.g., Installation Electrician and Maintenance Electrician, Plumbing and Domestic Heating Technician), find a provider, and co‑fund at 5% if you don’t pay the Apprenticeship Levy (that kicks in over £3m payroll). CITB‑registered firms can access training grants for in‑scope occupations. Build a progression ladder: apprentice to improver to qualified engineer, with clear rates, tool allowances and van access. Don’t forget people basics: contracts, right‑to‑work, induction on RAMS, hot‑works permits, and issuing PPE that actually fits. Hiring subbies? Verify them under CIS, use written terms, and treat them as suppliers, not staff.

The pattern is depressingly consistent. Underpricing to win work and then trying to make it back on “extras” torpedoes trust and creates disputes. Skipping deposits and front‑loading materials spend leaves you funding the client. Ignoring CIS—failing to register, verify subbies or submit monthly returns—leads to 20–30% deductions you can’t absorb and HMRC penalties. Signing main‑contractor terms without reading retention, variations and pay‑less notice clauses hands away leverage. Letting VAT creep up unnoticed until you breach the £90k threshold detonates your prices overnight; plan the jump and use reverse charge correctly. Not documenting electrical tests, gas commissioning, or photos behind plaster kills your defence on callbacks. Buying vans or fancy kit on impulse loads fixed costs before your diary is full. Last: neglecting reviews—Google stars are worth more than leaflet drops.