Thinking about going out on your own as a builder or contractor? Whether you’re a skilled tradesperson ready to formalise your setup, or a new startup aiming to go limited from day one, this step-by-step guide walks you through exactly how to launch a successful construction business in the UK.
This guide covers:
- Legal and financial setup
- Registration with HMRC, VAT and CIS
- Branding, insurance, and compliance requirements
- Tools, calculators, and downloads to help you run lean
- Pricing strategies and growth planning
Visit our free starter download tools and follow this expert-backed guide to launch with confidence and clarity.
Table of Contents
- 1. Choose Your Business Type
- 2. Register With HMRC, CIS & VAT
- 3. Set Your Prices (Calculator)
- 4. Name & Brand Your Business
- 5. Sort Your Compliance & Insurance
- 6. Tools You’ll Need (Free Downloads)
- 7. What to Do Next
1. Choose Your Business Type
Your legal structure impacts everything from your tax rate to liability and paperwork. Most small builders start as sole traders or limited companies, but partnerships are also used in joint ventures.
| Type | Taxation | Admin | Liability | Best For |
|---|---|---|---|---|
| Sole Trader | Self-Assessment | Low | Personal assets at risk | Startups & single-person trades |
| Limited Company | Corporation Tax | Medium | Limited liability | Subbies, growing builders |
| Partnership | Income Tax (shared) | Moderate | Shared liability | Joint ventures |
Going Ltd can be tax-efficient once you’re turning over £30,000–£40,000+, especially if you’re subcontracting for major builders.
Set up your business on GOV.UK
2. Register With HMRC, CIS & VAT
You must register with HMRC whether you’re going solo or incorporating a limited company. The process will vary depending on your structure, but the steps below are common for most new construction firms:
- HMRC Self-Assessment: Sole traders must register to file their yearly tax returns.
- Companies House + Corporation Tax: Limited companies must register the business and its directors.
- CIS (Construction Industry Scheme): Required if you’re subcontracting or employing subbies. Register as a contractor, subcontractor, or both.
- VAT: Compulsory if turnover is over £90,000. Optional flat-rate VAT may help smaller firms manage cashflow.
Read our full guide: When to Register for CIS, VAT & PAYE
Tip: You don’t need to register everything at once. Start with what applies now, then register additional items (like VAT) as you grow.
3. Set Your Prices
Underpricing your work is the fastest way to go bust. Many builders price jobs based on what they “think people will pay”—but you need hard numbers.
What to include in your price:
- Material costs + markup (typically 10–20%)
- Labour costs, including holidays, NI, pension contributions
- Overheads (tools, insurance, van, accounting)
- Net profit margin (target at least 15%)
Use our Free Charge-Out Rate Calculator to work out your minimum day rate for profit.
4. Name & Brand Your Business
Trust starts with your name. A strong local name boosts your SEO rankings, makes it easier to get van signage, and sticks in clients’ minds.
Branding checklist:
- Include location or specialism if possible (e.g., “Bristol Loft Builds”)
- Check Companies House for availability
- Buy your .co.uk domain and set up a basic website
- Design a simple logo, get van signage, and branded workwear
Not sure where to start? Try our Business Name Generator for Tradespeople.
5. Sort Your Compliance & Insurance
You’re legally required to follow construction safety laws—even as a sole trader. Many clients (especially commercial) won’t hire you unless you meet minimum compliance standards.
Legal requirements for construction businesses:
- Health & Safety: Risk assessments, RAMS, accident logs, PPE
- CSCS Cards: Required for most site work
- Insurance:
- Public liability (minimum £1M cover)
- Employers’ liability (if you hire anyone)
- Tools insurance
6. Tools You’ll Need (Free Downloads)
Running a building business today means having solid digital tools. These are free to use or low cost, and will save you hours of admin each week.
Recommended tools for startups:
To keep your business finances in order, we recommend using dedicated software. See our roundup of the Best Accounting Software for Contractors for options that suit UK tradespeople.
7. What to Do Next
You’re now set up, registered, and ready to trade. So what comes next?
Immediate goals:
- Build your online presence (Google, Checkatrade, Facebook)
- Network with local trades for referrals
- Start collecting reviews from early clients
- Quote fast, follow up, and learn from rejection
Grow wisely:
- Use subcontractors to scale before hiring staff
- Use software or a QS service for accurate estimating
- Set a 12-month turnover and profit goal
Not sure how to pay yourself as you grow? Read our guide on owner drawings vs payroll.
Need help with pricing? Our team of UK quantity surveyors can help you cost up your next job.
Frequently Asked Questions
What do I need to start a construction business in the UK?
At minimum, you need to register with HMRC, choose a business structure (sole trader or limited company), get insurance, and comply with health and safety rules. Most builders also need tools, branding, and pricing templates to win jobs.
Do I need qualifications to start a building business?
No formal qualifications are required to register a construction business in the UK, but CSCS cards and trade NVQs can help you access more sites and win higher-value work.
What insurance do I need as a self-employed builder?
Public liability insurance is essential. If you hire staff, you legally need employers’ liability cover. Many builders also insure their tools and vans for theft or damage.
How much does it cost to start a construction company?
Startup costs can range from £500–£5,000 depending on tools, transport, branding, and insurance. You can start lean, but make sure your pricing covers all costs and overheads.
Should I register as a sole trader or limited company?
Sole trader is easier and faster, but limited company offers tax efficiency and personal liability protection. Many builders go Ltd once turnover exceeds £30k–£40k.
What is the Construction Industry Scheme (CIS)?
CIS is a government scheme that handles tax payments between contractors and subcontractors. If you work as or hire subcontractors, you must register for CIS through HMRC.
Do I need to register for VAT as a small builder?
You must register if your turnover exceeds £90,000 in a 12-month period. Below that, VAT is optional, but some builders benefit from joining the flat-rate VAT scheme early.
What tools or software do small construction companies use?
Builders use tools like cost calculators, invoice templates, quote generators, and job management apps like Tradify or Fergus. Check out our free starter pack for downloads.
Can I work alone or do I need a team?
You can absolutely start solo. Many one-man bands subcontract specialist work or hire temporary help as needed, rather than taking on staff full-time.
How do I price construction jobs correctly?
Use a day-rate calculator to factor in materials, labour, overheads, and profit. Avoid guessing or copying competitors. Try our Free Cost Calculator.
How do I pay myself from my construction business?
If you’re a sole trader, you simply take drawings. If you’re Ltd, you may use a mix of salary and dividends. Learn more in this guide.
What’s the best way to get your first building clients?
Start with friends, family, and local Facebook groups. Set up Google My Business, join trade platforms like Checkatrade, and gather reviews from early customers to build trust.