From Subcontractor to Main Contractor: The Ladder Nobody Explains

Going from subcontractor to main contractor means holding the contract with the client instead of selling your labour to whoever holds it. The trade work does not change. What changes is that you now own the programme, the site, the payment chain and the defects, and you buy the trades in rather than being one of them.

I have run both sides of that line. This post is the ladder as it actually works in the UK: which rung costs money, which rung costs time, and the two places where firms making this jump most often fall off. If you want the model itself first, start with what construction arbitrage is - this post is what the paperwork and the risk look like once you are the one holding the contract.

What actually changes when you hold the contract#

Three things transfer to you on the day you sign as the contract holder, and none of them are optional.

Health and safety duties transfer. Under CDM 2015, where a project involves more than one contractor the client must appoint a principal contractor, and that is you the moment you bring in a second trade. The principal contractor plans, manages and monitors the construction phase, produces the construction phase plan, runs site induction, provides welfare facilities and keeps unauthorised people out. On a project scheduled to last more than 30 working days with more than 20 workers on site at the same time, or exceeding 500 person days, the job is notifiable to the HSE. These duties do not sit with the subcontractor who did the work. They sit with you.

The payment chain transfers. You become the payer as well as the paid. That means CIS on the paying side: register with HMRC as a contractor, verify every subcontractor before you pay them, deduct 20 per cent from those who are registered and verified and 30 per cent from those who are not, and pay it over monthly. From 6 April 2026 mainstream contractors also have to file a nil return or notify a period of inactivity in months when they pay nobody, so the filing does not stop when the work does.

Defects transfer. The client comes to you after completion. Whether your subcontractor is still trading, still answering the phone, or still solvent is your problem, not theirs.

As a subcontractor your exposure ends at your own invoice. As the contractor it ends at the end of the defects period, and everything in between is yours.

Rung one: the paperwork, and what it really costs#

This is the rung people over-estimate. It is real, but it is weeks of admin, not a barrier.

Employers' liability insurance is the one piece set by law: a minimum of £5m under the Employers' Liability (Compulsory Insurance) Act 1969 once you employ anyone, and in practice most insurers write it at £10m because it costs little more. Public liability is different. No statute sets it. Your buyer does.

Here is what our own data says about that, because the honest answer is not what the forums tell you. Across the 557 UK work-winning routes we track, only 64 name a specific insurance figure at the registration stage at all. The rest capture your insurer, policy number and cover values as self-declared fields and set the actual minimum per tender. Where a public liability figure is named, £5m is the most common level by a distance, £2m appears next, and £10m sits at the top end. Employers' liability, where named, is almost always £5m - which is simply the legal floor written into the form.

The practical consequence matters more than the numbers. You do not pre-qualify once at a level and stay qualified. A typical social landlord dynamic purchasing system will ask for employers' liability at £5m and public liability anywhere from £2m to £10m depending on the value of the lot. The insurance bar moves with the contract, so the question is never "am I insured enough to be a main contractor" - it is "am I insured enough for this job". The insurance stack you need is a per-contract decision from here on.

Rung two: buyers who will award to a first-timer#

The harder rung is not paperwork. It is that most buyers ask for references on work of similar type and value, and a first-time contract holder does not have them.

Of the 557 routes we track, 253 take a straight open application: no invitation, no fee, no platform gatekeeper. That is the pool worth working, and inside it the ones that suit a first-time contract holder share a shape - low individual job value, repeat volume, and buying by quote rather than by tender.

• Councils and social landlords buying repairs job by job. Response repairs, voids and small works are quoted, not tendered, which means the assessment is your paperwork and your response time rather than a five-year reference list. Council DLOs buying in trades are the clearest version of this.
• Registrations that multiply reach. One account on a shared portal can put you in front of dozens of buyers at once. Getting registered on the council procurement portals is the cheapest week of work available to anyone at this stage.
• Private clients and small commercial. Landlords, letting agents, block managers and small commercial sites award on trust and price, not on a scored PQQ. This is where most first contracts actually come from, and where finding clients directly pays for itself fastest.
• Insurance and managed-repair volume, later. The insurance repair channel runs on network membership and takes longer to get into, but it is the most reliable volume once you are through.

Financial capacity is the quieter version of the same gate. Around 72 of the routes we track raise turnover somewhere in what they ask for, and the usual rule of thumb a buyer applies is that a single contract should not exceed a fraction of your annual turnover. That rule is why the ladder is a ladder. Contract value is capped by last year's accounts, so you climb it one year at a time rather than jumping.

The two rungs where firms actually fall off#

Almost nobody fails this transition on health and safety paperwork. They fail on these two.

Cash flow, specifically retentions. As the contract holder you pay your subcontractors on their terms and get paid on the client's. Then the client holds retention on top - commonly 3 to 5 per cent of the contract value, typically half released at practical completion and the balance after the defects period, which is usually another twelve months. That retained money is your profit, sitting in someone else's account, a year after you finished. Firms that price as though the retention is income run out of cash on their best year. Cash flow discipline is the whole game at this rung, and how you price the job is where the retention has to be absorbed.

Coordination risk. As a sub, a no-show is an inconvenience. As the contractor, a no-show is a delayed programme, a client on the phone and potentially damages. The firms that survive this rung are the ones that built depth in their subcontractor list before they needed it, and vetted for reliability rather than rate. One trade with one option behind it is a business built on hope.

How I would climb it#

If I were making this jump again, in this order:

1. Register the compliance basics first. CIS as a contractor, employers' liability at £5m minimum, public liability at £5m as a working default, and the trade registrations you already hold. Weeks, not months.
2. Win small direct contracts you could deliver yourself. The point is not the margin. It is that each one is a reference on work of a similar type, which is the currency the next rung asks for.
3. Buy in one trade at a time. Add the second trade before you add the second job. Your first coordination failure should happen on a job small enough to absorb it.
4. Price the retention in from the first contract. Assume it exists, assume it is late, and never spend it before it lands.
5. Only then chase volume channels. Portals, frameworks and repair networks reward firms that already have references and accounts to show. Chase them first and you spend six months writing bids that score zero.

The step everyone wants to skip is number two, because it feels like standing still. It is not. It is the only thing that makes rungs three, four and five possible, and it is the difference between being a contractor and being a subcontractor with ambitions.

This is general guidance from running the model, not legal, tax or insurance advice - CDM duties, CIS obligations and insurance requirements depend on your specific contracts, so take proper advice on yours.

What the map above cannot give you is the bit that changes monthly: which buyers are awarding to first-time contract holders right now, what they asked for, and what the reference request actually looked like. That is the conversation happening inside the community, between operators who are one rung ahead rather than one book ahead.

Last checked: 13 August 2026.