Running a trade business in the UK: CIS, competence schemes and getting paid without liens

The UK has no contractor licence, no lien system and yet more compliance than almost anywhere, because the control sits in tax law, gas and electrical safety schemes and building safety duties. Here is the 2026 picture for England, Scotland, Wales and Northern Ireland, with the national differences flagged.

Competence instead of licences

Gas work is the hard legal line: engineers and businesses must be on the Gas Safe Register, full stop. Domestic electrical work in England and Wales falls under Part P: notifiable jobs need a registered competent person (NICEIC, NAPIT and similar) or building control sign-off. Scotland runs on building warrants and approved certifiers instead, and Part P does not apply in Northern Ireland. The Building Safety Act 2022 adds dutyholder competence requirements on all building work and a full regulatory regime on higher-risk buildings, and CDM 2015 plus the HSE govern site safety everywhere.

CIS: the tax scheme that runs the industry

The Construction Industry Scheme makes contractors deduct tax from subcontractor labour payments: 20% for registered subs, 30% unregistered, 0% with gross payment status. Monthly returns are compulsory, and from April 2026 nil returns become mandatory too unless inactivity is pre-notified to HMRC, alongside changes removing certain housing association payments from scope. Losing gross payment status is expensive, and HMRC can cancel it where a business knew or should have known of fraud in its chain, so vet your subcontractors.

VAT and the reverse charge

Standard VAT is 20%, with the domestic reverse charge applying to most construction services between VAT-registered, CIS-registered businesses: the customer accounts for the VAT and the sub invoices without collecting it. It is cash-flow negative for subs, which makes payment terms and invoice timing matter even more.

Getting paid: notices and adjudication

With no liens, the Construction Act does the work: construction contracts must allow statutory adjudication, where an adjudicator decides in around 28 days and the decision binds until final resolution. The payment notice regime is the other half: if the payer misses its payment notice and pay-less notice deadlines, the sum claimed becomes due in full. Trades that master notices and adjudication collect; those that rely on goodwill wait.

FAQs for the UK trade businesses

Is there really no contractor licence in the UK?

Correct, there is no general licence. What bites instead: Gas Safe registration is a legal requirement for gas work, Part P governs domestic electrics in England and Wales, CIS governs tax on subcontract payments, and the Building Safety Act adds competence duties. Scotland and Northern Ireland differ on the electrical rules, so check per nation.

What CIS changes hit in April 2026?

Monthly returns become mandatory even when nil unless HMRC is pre-notified of inactivity, and some payments involving housing associations leave the scheme. Deduction rates stay at 20/30/0. Late or missing returns risk gross payment status, which is expensive to lose.

How do I deal with a client who just does not pay?

Construction contracts carry a statutory right to adjudication: an independent adjudicator decides within about 28 days and the decision is binding until final resolution. Combined with proper payment and pay-less notice procedure, it is the UK trade’s main payment weapon, since there is no lien system.

This guide is general information, not legal advice. Licensing thresholds, payment statutes, insurance and tax rules change; always confirm current requirements with the regulator, a lawyer or your accountant before relying on them.