A sub contractor is a sole trader and this page should be read in conjunction with the section on sole traders.

The status for tax purposes of a subcontractor in the construction industry is determined by HM Revenue & Customs. Tax is usually deducted at source at either 20 or 30% and paid over to HM Revenue & Customs.

However the sub contractor must keep accounting records and file an annual tax return in the same way as a sole trader. It is often the case that a sub contractor is able to obtain a refund of some of the tax that has been deducted at source. This situation occurs as a result of being able to offset legitimate business expenses incurred in the carrying out of his/her trade.