Bookkeeping for sole traders in the trades
We keep your books up to date every month, so you are not sorting a year of receipts in January and your accountant gets clean books with less for them to sort out. If you take on help or register for VAT, we prepare your CIS return for you to send and file your VAT return once you approve it.
Does CIS apply to sole traders?
If you work on your own and invoice homeowners directly, the Construction Industry Scheme (CIS) does not apply to you. A private householder is never a contractor, so there is nothing to register for and nothing to file.
If your work comes from a builder or main contractor instead, you are a subcontractor under CIS. They take 20 or 30 percent off your invoices and pay it to HMRC. That money is paid towards your tax for the year. Where CIS deductions go and how you get them back
Many tradespeople do both in the same year. Only the work that comes through a contractor has deductions taken off.
Do sole traders need to use Making Tax Digital?
Yes, once your income from self-employment and property goes over a set amount. Making Tax Digital for Income Tax means keeping your records in software that works with HMRC and sending HMRC a summary every three months, as well as your tax return. When you need to start depends on your income:
- Over £50,000 in the 2024 to 2025 tax year: from 6 April 2026
- Over £30,000 in the 2025 to 2026 tax year: from 6 April 2027
- Over £20,000 in the 2026 to 2027 tax year: from 6 April 2028
Every Making Tax Digital threshold, start date and deadline
If you must start from 6 April 2027, the Budget on 28 October 2026 announced no penalty points for late quarterly updates in the 2027 to 2028 tax year, though you still send every update before your tax return (a plan, could change).
We keep your records in software that works with Making Tax Digital and send your quarterly updates to HMRC once you have approved them, so the new rules do not add to your evenings.
What Budget 2026 changes for sole traders
- From 6 April 2027, the trading allowance is set to rise from £1,000 to £3,000, and so is the trading income you can have before you must report it on Self Assessment (needs Parliament to pass Finance Bill 2026-27).
- The Class 2 National Insurance small profits threshold is set to rise from £7,105 to £7,355 a year from 6 April 2027 (set by regulations). Above it you pay no Class 2; below it, paying Class 2 is voluntary.
- From April 2029, payments on account are set to be replaced by more regular payments during the year, and how often has not been decided (a plan, could change).
How to keep your books right as a sole trader
These are the things that matter, whoever keeps your books. Get them wrong and it costs you money when the year is finished and somebody has to make sense of it.
- Record every sale and every business cost. Your tax is worked out on your profit, what came in less what the business spent, so a cost you do not record means paying more tax than you need to.
- Record money when it actually moves. From the 2024 to 2025 tax year, the cash basis is HMRC's default for sole traders: you record income when you are paid and costs when you pay them, not on the invoice date.
- Keep the receipt as well as the bank statement. A bank statement shows money went out. It does not show what it was for, and that is what you need to be able to prove.
- Keep your records for at least 5 years after the 31 January submission deadline for that tax year's Self Assessment.
- Keep business and personal money apart. A sole trader does not legally need a separate business bank account, but having one makes the year much quicker to sort out.
- Write each journey down on the day. Mileage is the one expense with no receipt, so it is the one people lose most of. Trying to work out a year of site visits in January is guesswork, and guesswork will not stand up. Mileage rates and which journeys count
- Keep an eye on the VAT threshold. You must register for VAT once your taxable turnover goes over £90,000 in any 12 months in a row, not just in a tax year. In a good year that can come sooner than you expect. What counts toward the VAT threshold
When should a sole trader get a bookkeeper?
Any one of these is a good reason to hand your books to us.
You start paying someone else to do work
This is the biggest change. Pay even one labourer for two weeks and you become a contractor under CIS. From then on a CIS return is due by the 19th of every month, even in months you pay nobody. We prepare it for you to check and send. If you take on an employee instead, we run your payroll and file it once you have approved the pay run. What CIS means for contractors
You go over the VAT threshold
Once your taxable turnover goes over £90,000 in any 12 months in a row, you have a VAT return to send every quarter. In construction, the reverse charge also means that on many of your invoices your customer accounts for the VAT instead of you. We prepare your VAT returns and file them once you have approved them. Our VAT returns service
The paperwork is taking up your evenings
When the hours you spend on paperwork would be better spent on paid work, or on time off, it makes sense to hand the books to us.
Not sure where you stand? Tell us about your work and we will give you a straight answer.
Get in touchCommon questions from sole traders
Do I need to register for CIS if I work on my own?
Not as a contractor, because you are not paying anyone else to do construction work. A private householder is never a contractor either, so work you invoice straight to homeowners is outside CIS completely. If you take work from a builder instead of the homeowner, you are a subcontractor under CIS and deductions will be taken off your invoices.
Do I need a bookkeeper at all?
You do not have to have one, and many sole traders start by doing their own books. A bookkeeper keeps your records up to date through the year, so nothing piles up for January and your accountant has less to do. It matters most once you pay someone else to work for you, go over the £90,000 VAT threshold, or the paperwork is taking up your evenings. We can take your books on at any of those points.
What does a bookkeeper do for a sole trader?
We record every payment in and out of your business, match your receipts and invoices to your bank, and keep your mileage log, all in your own Xero. When the tax year ends, your figures are ready for your Self Assessment tax return. If you are VAT registered, we prepare your VAT returns and file them once you approve them.
How much does a bookkeeper cost for a sole trader?
It depends on your turnover, and on whether you are VAT registered or pay anyone else. You can see your exact monthly price on our pricing page in about a minute, with no email needed, and it stays fixed once agreed.
Does a sole trader need an accountant?
Not by law. Plenty of sole traders send their own Self Assessment return. What you do need is complete, up to date records, and that is the part we take on. Your figures are ready for your Self Assessment return, whoever sends it.
What records do I actually have to keep?
Enough to show what you earned and what you spent: sales invoices, purchase receipts, bank statements and a record of your mileage. Keep them for at least 5 years after the 31 January submission deadline for that tax year. The mistake people make most is relying on bank statements alone, because a bank statement does not show what each payment was for.
Should I set up a limited company?
It depends on your profit, how you take money out of the business and what you plan to do next. That is a question for an accountant, not a bookkeeper, so we will not guess at it. Whichever way you go, we keep the books.
Primary sources and further reading
If HMRC and this page ever disagree, HMRC is right. Tell us and we will fix it.
- Business records if you're self-employedGOV.UK (opens in a new tab)
- Register for VATGOV.UK (opens in a new tab)
- What you must do as a Construction Industry Scheme (CIS) subcontractorGOV.UK (opens in a new tab)
- Find out if and when you need to use Making Tax Digital for Income TaxGOV.UK (opens in a new tab)
- Use Making Tax Digital for Income Tax: send quarterly updatesGOV.UK (opens in a new tab)
- Budget 2026: Overview of Tax Legislation and Rates (OOTLAR)GOV.UK (opens in a new tab)
- Annex A: rates and allowancesGOV.UK (opens in a new tab)
- Timely Payments in Income Tax Self Assessment (ITSA): Summary of responsesHMRC (opens in a new tab)
Join the waitlist for 2027
Join the waitlist for 2027. Tell us about your work: who you work for, whether you pay anyone and whether you are VAT registered. We will tell you what we would do for you and what it costs.