How to set up a construction company in the UK

Setting up your own construction business can be a bold but rewarding move. Whether you’re a self-employed builder taking the next step or someone with years of experience in the trades, creating a limited company puts you in control of your time, income and future.

But it’s not just about tools and talent. To build a business that lasts, you’ll need the right structure, team and support behind you. Here we’ll walk you through some of the main steps to get you started, with practical tips and links to official sources so you can dig deeper when needed.

Remember, this is general information rather than financial or legal advice. For anything complex or specific to your business structure, taxes, financial and legal obligations, it's always worth speaking to a qualified tax adviser. 

1. Start with a business plan

What are you building and who is it for?

Take time to sketch out your goals, even if it's just a one-page document for now. Ask yourself:

• Are you focusing on commercial jobs or residential work like home extensions and renovations, etc?
• Will you subcontract or hire employees?
• Do you want to stay local or take on larger-scale projects?
• What do you need to earn each month to make it worthwhile?

At this stage you should also work out your key costs – vans, tools, insurance, licences, etc – to understand what you’re working with financially. A rough business plan will help you stay focused when decisions start coming at you fast.

2. Choose the right business structure

In the UK, small construction firms usually set up in one of three ways:

• Sole trader – Easy to set up and run, but you’re personally liable for debts you may incur through your work.
• Limited company – A separate legal entity, this route demands more admin but generally offers protection against any liabilities incurred by your business.
• Partnerships – If you’re going into business with someone else, this can be a simple starting point to share control and responsibilities.

Each structure has its pros and cons depending on your ambitions and setup. The right structure can affect your tax position, liability and access to credit, so it’s worth getting it right from the start. You can read more about the differences on GOV.UK and, as always, it’s wise to speak to a legal or tax professional before deciding.

If you decide to become a limited company, you’ll need to register with both HMRC and Companies House, but if you decide to become a sole trader or partnership then you only need to register with HMRC. 

Looking to register as a limited company? Zempler’s Company Formation Service makes it quick and easy.

3. Understand your legal obligations

Construction businesses are subject to a few extra legal requirements beyond standard company registration. Here are some important ones to bear in mind:

Construction Industry Scheme

If you work as a subcontractor or hire subcontractors, you must register for the Construction Industry Scheme (CIS). This is a HMRC-run scheme where tax is deducted at source.

Failing to register can lead to higher tax deductions or penalties.

Health and safety compliance

You’ll also need to comply with rules enforced by the Health and Safety Executive (HSE). Depending on your work, this could include:

• Site safety plans
• Risk assessments
• PPE protocols
• Asbestos awareness

Local authorities may also require planning permission or permits for scaffolding, skips or street works. These vary by location, so always check with the relevant council about your obligations.

4. Sort your insurance and licences

Most clients (and insurers) will expect you to have:

• Public liability insurance – Covers damage or injury caused by your work
• Employers’ liability insurance – Legally required if you employ staff
• Tool insurance – To cover loss, theft or damage to your equipment

The type of cover you need will depend on your services and setup – an insurance broker who specialises in construction will help make sure you're properly protected.

You might also need a CSCS card, proving you have the required qualifications, training, and health and safety knowledge to work on commercial or regulated construction sites. Check what’s needed via cscs.uk.com.

5. Open a business bank account

While not legally required for sole traders, a dedicated business bank account helps keep your finances separate and organised – especially when dealing with subcontractors, VAT and CIS payments. If you’re setting up a limited company, a separate business bank account is a legal requirement.

With Zempler Bank you can:

• Apply for an account online in minutes, with minimal paperwork
• Track your spending and invoices in real time
• Get support from our UK-based customer service team

If you're just starting a construction company and want to avoid complex forms or surprise fees, a digital-first option like Zempler Bank can keep things simple and easy.

6. Buy or lease your equipment

From ladders to tools, vans to PPE – your equipment is the backbone of your business.

You can either buy, lease or finance your tools depending on your budget and needs. Just remember: if you're using credit or hire purchase, check the terms carefully.

Alternatively, good-quality secondhand equipment can help get you going while you build up regular work and a cash pot to invest in new kit as you need it. 

7. Hire the right people (when you need them)

If you’re growing beyond a one-person operation and want to take on staff, you’ll need to meet legal requirements as an employer.

Here’s a quick checklist:

• Register as an employer with HMRC
• Check each employee’s right-to-work documentation
• Set up PAYE for tax and National Insurance
• Provide a safe working environment under HSE rules
• Offer a workplace pension if legally required

Many construction firms also work with subcontractors under CIS so it’s important to make sure you’re following the right process for each.

8. Consider registering for VAT

If your taxable turnover goes over £90,000 within a 12-month period, you must register for VAT.

But even if you're below the threshold, it could be worth doing what many construction businesses do and register voluntarily – especially if you’re buying expensive materials or working with VAT-registered firms. You can find out more on the GOV.UK VAT registration page. 

9. Market your construction business

Winning clients is about more than being good at your trade – you also need visibility and trust.

But when you’re first starting your business, you’ll want to keep things simple. Don’t try to overcomplicate your marketing.

Here are some ways to get the word out:

• Build a simple website with before-and-after photos of projects your business has completed
• Register with relevant lead-generation communities like BookaBuilder
• Set up a Google Business Profile
• Brand your business vehicle with signs and give your team simple uniforms
• Ask clients for reviews and add them to your website

Remember: people often search for terms like “builder near me” or “loft conversion London” – so at a minimum make sure your online presence includes your location and services.

Final thoughts

There’s a lot to think about when setting up a construction business. And while it can feel overwhelming at times, breaking it into steps makes it far more manageable.

Start with what you know – your craft – and build outwards from there. With the right setup, support and financial tools, you’ll be laying strong foundations for something meaningful.

Remember, if you’re unsure if it’s right for you or your business, speak to a qualified advisor or professional.

If you’re ready to take the first step, Zempler Bank’s business accounts are built for businesses like yours – fast, flexible and made for sole traders and small businesses who just want things to work.