Trades admin: 34 questions on invoices, CIS, VAT, quotes and getting paid, answered

Question 1

How much interest can I charge on a late invoice?

Accepted Answer

On an invoice to another business, 8% a year above the Bank of England base rate. With Bank Rate at 3.75% that is 11.75% a year, worked out daily. A £2,400 invoice paid 60 days late carries £46.36 of interest, about 77p a day. Statutory interest is for business customers only; it does not apply to a householder's bill.

Question 2

What is the fixed fee for a late-paying business customer?

Accepted Answer

£40 on a debt under £1,000, £70 on a debt from £1,000 to £9,999.99, and £100 on a debt of £10,000 or more. You can claim it once per late invoice, on top of the interest. A £2,400 invoice 60 days late therefore comes to £46.36 interest plus £70.

Question 3

How much CIS is deducted from a subcontractor's invoice?

Accepted Answer

20% if the subcontractor is registered for CIS, 30% if not, and nothing if they have gross payment status. The deduction is taken from labour only, not materials or VAT. On a £3,800 invoice made up of £3,000 labour and £800 materials, a registered subcontractor is paid £3,200, an unregistered one £2,900 and a gross one £3,800.

Question 4

When is the CIS monthly return due, and what is the penalty for missing it?

Accepted Answer

By the 19th of each month, for the tax month that ended on the 5th. A return one day late is a £100 penalty; two months late adds £200; at six months it is £300 or 5% of the deductions, whichever is higher, and the same again at twelve months. The 5% figure overtakes £300 once the month's deductions pass £6,000.

Question 5

How do I take the VAT out of a total price?

Accepted Answer

Divide the total by 6 for 20% VAT. Do not take 20% off: on a £1,200 total that gives £240, but the VAT is £200 and the net price £1,000. The mistake overstates the VAT by £40 on every £1,200.

Question 6

When does a tradesperson have to register for VAT?

Accepted Answer

When taxable turnover in any rolling 12 months goes over £90,000, not at the end of the tax year. You must register within 30 days of the end of the month you went over, and VAT applies from the first day of the second month after. A firm that goes over in the 12 months to December registers by 30 January and charges VAT from 1 February.

Question 7

Does Making Tax Digital for income tax apply to a sole trader?

Accepted Answer

Yes if your qualifying income is over £50,000, from 6 April 2026. Qualifying income is turnover from self-employment and property, not profit, so an electrician turning over £68,000 with £41,000 profit is in. The threshold falls to £30,000 from April 2027. You keep digital records and send an update each quarter.

Question 8

What does a UK invoice have to include?

Accepted Answer

A unique invoice number, your business name, address and contact details, the customer's name and address, a description of the work, the date of the work and the invoice date, the amount charged, VAT if you are registered, and the total. A VAT invoice also needs your VAT number and the rate. Under the construction reverse charge, the invoice states that the customer accounts for the VAT.

Question 9

What can I do if a customer will not pay for work I have done?

Accepted Answer

Send a reminder, then a letter before claim giving a deadline (30 days for an individual under the debt pre-action protocol), then claim through Money Claim Online. The court fee on a £2,400 claim is £115. Against a business customer 60 days late you can add £46.36 interest and a £70 fixed fee, so the claim is worth more than it costs to bring.

Question 10

Can a householder cancel a job they agreed in their own home?

Accepted Answer

Yes. A contract agreed in the customer's home is an off-premises contract and carries a 14-day cancellation period. If you did not give the customer the cancellation information in writing, the period runs for up to 12 months and 14 days, and they owe nothing for work already done. Put the cancellation wording on every quote signed at the customer's home.

Question 11

When should I follow up a quote?

Accepted Answer

On day 3 and day 7 after sending it. The day 3 message checks the quote arrived and offers to answer questions; the day 7 message gives a date the price holds until. Two follow-ups are enough: a third reads as pressure, and a quote with no follow-up at all is the commonest way a job is lost without anyone deciding to lose it.

Question 12

What does a lead cost on Checkatrade, MyBuilder, Bark and Rated People?

Accepted Answer

At 20 leads a month and one job won in four, the cost per won job at mid-range published prices is about £80 on MyBuilder, £90 on Bark and £119 on Rated People. Checkatrade charges a membership fee instead of a price per lead, so it ranges from about £16 to £250 per won job depending on the fee and how many jobs you win.

Question 13

Is Tradify or ServiceM8 cheaper for a small trades firm?

Accepted Answer

For a nine-person firm that needs four logins, ServiceM8 was cheaper on the prices published on 1 October 2026: Tradify Pro for four users is £1,776 a year against £708 for ServiceM8's Growing plan. Over three years the gap is £3,204. Tradify charges per user and ServiceM8 by jobs a month, so the answer changes with head count and job volume.

Question 14

When does Amendment 4 of the 18th Edition wiring regulations take effect?

Accepted Answer

Amendment 4 to BS 7671 was published on 15 April 2026 and the previous edition is withdrawn on 15 October 2026, so installations designed after that date follow the amended edition. Separately, certificates for notifiable work must reach the occupier and building control within 30 days of completion, whether or not the customer has paid.

Question 15

How should a builder chase an unpaid invoice?

Accepted Answer

In writing, on a schedule: a reminder the day after the due date, a firmer letter a week later that states the invoice number, the amount and the date it was due, and a final letter before claim with a deadline. For a business customer, state the statutory interest and fixed fee you are entitled to add. Keep each letter dated; the court will ask for them.

Question 16

Can an AI tool run the office side of a trades firm?

Accepted Answer

Parts of it. Most AI tools sold to UK trades firms answer the phone. Fewer write quotes, chase invoices or keep CIS dates. Overlyft can set up an AI assistant that handles email and website enquiries, quotes and their follow-ups, invoice chasing and paperwork and does not answer calls. Our review of five tools sets out what each covers and costs.

Question 17

Do I have to pay tax on scrap copper I take off jobs and sell to a scrap yard?

Accepted Answer

Yes. Scrap from your jobs is business income and goes in your turnover, which HMRC defines as the total amount your business receives by any payment method. On £600 of scrap a basic-rate sole trader owes £156: 20% Income Tax plus 6% Class 4 National Insurance. The £1,000 trading allowance does not help, because claiming it means giving up all your expenses.

Question 18

Can a scrap yard pay a plumber or electrician in cash for scrap metal?

Accepted Answer

No, not in England and Wales. Since 1 October 2013 a scrap dealer may pay only by electronic transfer or a non-transferable cheque. The dealer must also verify your full name and address and keep a record of the sale for 3 years. A tradesperson selling scrap as an incidental part of the job does not normally need a dealer's licence.

Question 19

How much does Making Tax Digital software cost a sole trader a year?

Accepted Answer

At list prices read on 1 October 2026, the cheapest plans marked ready for Making Tax Digital for Income Tax cost £84 a year on Xero Simple, £120 on QuickBooks Sole Trader Plus and £190 on FreeAgent paid yearly. Xero Simple is capped at 10 invoices. A VAT-registered trader needs a dearer plan on Xero (£216) or QuickBooks (£192), while FreeAgent stays at £190.

Question 20

Can a tradesperson's terms and conditions say no refunds or no liability once the job is finished?

Accepted Answer

You can print it, but it will not hold against a householder. Section 57 of the Consumer Rights Act 2015 says a term excluding liability for work not done with reasonable care and skill is not binding, and Schedule 2 lists a cancellation charge that is disproportionately high as a term that may be unfair. Charge what a late cancellation cost you.

Question 21

How long do I have to wait after sending a letter before action before I can start a court claim?

Accepted Answer

If the customer is a householder or a sole trader, 30 days from the date at the top of the letter. The letter of claim must go by post with the protocol's information sheet, reply form and financial statement form. On a £2,400 invoice, court interest at 8% a year is about 53p a day and the court fee is £115.

Question 22

Does CIS still get deducted when a new-build house is zero-rated for VAT?

Accepted Answer

Yes. VAT and CIS are separate. On a new-build house a VAT-registered subcontractor zero-rates labour and building materials and the reverse charge does not apply, but the contractor still deducts CIS from the labour. On an invoice of £4,000 labour and £1,500 materials at 0% VAT, a registered subcontractor is paid £4,700 and £800 goes to HMRC.

Question 23

Do I have to pay statutory sick pay from the first day an employee is off sick?

Accepted Answer

Yes. Since 6 April 2026 statutory sick pay starts on the first full day off sick, and there is no minimum earnings test. The rate to 5 April 2027 is £123.25 a week, or 80% of average weekly earnings if that is lower. On a five-day week that is £24.65 a day, so a three-day absence costs the firm £73.95.

Question 24

Do I have to make payments on account if most of my tax was already taken off under CIS?

Accepted Answer

Usually not. Payments on account are not due if you owed less than £1,000 last year after deductions, or if more than 80% of your tax was paid outside Self Assessment, and CIS deductions are treated as Income Tax paid. A subcontractor with a £7,651.80 bill and £7,200 deducted pays £451.80 by 31 January 2027 and nothing in July.

Question 25

How much tax does a self-employed tradesperson owe by 31 January 2027 on a profit of £42,000?

Accepted Answer

For the 2025 to 2026 tax year, £7,651.80: Income Tax of £5,886 (20% of the £29,430 above the £12,570 Personal Allowance) plus Class 4 National Insurance of £1,765.80 (6%). With no payments on account made last year, a first payment on account of £3,825.90 is due the same day, making £11,477.70, with another £3,825.90 by 31 July 2027.

Question 26

What happens if a customer ignores a county court judgment for an unpaid invoice?

Accepted Answer

Nothing, until you act. The court will not enforce a judgment unless you ask it to and pay a fee. In England and Wales you can ask for a warrant of control, an attachment of earnings order, a third-party debt order or a charging order. The judgment stays on the public register for 6 years unless the customer pays in full within one month.

Question 27

How much does it cost to send bailiffs after I win a small claim against a customer?

Accepted Answer

A county court warrant of control costs £96 in the court fees leaflet updated on 13 July 2026, and covers debts up to £5,000. The fee is added to what the customer owes but is not refunded if nothing is collected. On a £2,400 invoice, the £115 claim fee plus the warrant comes to £211. An order to obtain information first costs £69.

Question 28

How much does ChatGPT cost a small UK business, and does it use what I type to train its models?

Accepted Answer

On 1 October 2026 ChatGPT Plus was £20 a month including VAT, and chats on it are used for training unless you opt out under Settings, Data controls. ChatGPT Business was £18 a user a month before VAT, or £15 on annual billing, starts at 2 users, and is not used for training by default.

Question 29

Do I have to have public liability insurance as a self-employed tradesperson?

Accepted Answer

No. No law requires public liability insurance; the Health and Safety Executive calls it generally voluntary, though schemes such as NICEIC ask for at least £2 million. Employers' liability insurance is the compulsory one: at least £5 million of cover from the day you become an employer, with a fine of up to £2,500 for each day without it.

Question 30

How long do I have to keep invoices and receipts as a self-employed tradesperson?

Accepted Answer

At least 5 years after the 31 January deadline for that tax year's return, so records for the 2025 to 2026 tax year are kept until at least 31 January 2032. VAT records must be kept for at least 6 years, CIS records for 3 years after the tax year ends and waste transfer notes for 2 years.

Question 31

Do I need a waste carrier licence to take rubble or an old bathroom suite away in my van?

Accepted Answer

Yes. The free lower tier covers a business carrying only its own waste, except construction or demolition waste, and construction includes repair and alteration. A trades firm carrying building waste needs an upper tier registration: £191.02 in England for three years, then £130.25 to renew, or £184 in Wales. GOV.UK says the fine for not registering is unlimited.

Question 32

How much does Gas Safe registration cost in 2026?

Accepted Answer

For 1 April 2026 to 31 March 2027 a new business pays a £178.06 application fee and a £205.90 registration fee, £383.96 including VAT, which covers one engineer and a digital licence card. Each further engineer is £53.28. Registration lasts 12 months, and renewing online costs £167.74 against £205.90 by phone or post.

Question 33

Can I claim back VAT on tools and a van I bought before I registered for VAT?

Accepted Answer

Yes, within limits. You can reclaim VAT on goods bought up to 4 years before registration if you still have them, which covers tools, a van and stock, and on services bought in the 6 months before. They must be for the business that is now registered, and you need a valid VAT invoice for each one.

Question 34

When do I have to give a CIS subcontractor their payment and deduction statement?

Accepted Answer

If you made a deduction, within 14 days of the end of each tax month. A tax month ends on the 5th, so the statement for the month to 5 June is due by 19 June, the same day as the monthly return. The subcontractor needs it to claim the deductions against their own tax bill.