Win the Contract, Subcontract the Work: The Rules UK Contractors Must Actually Follow

The subcontracting rules UK contractors actually have to follow come down to five things: your contract has to allow it, the liability for the work stays with you, the site safety duties attach to whoever controls the job, CIS turns you into a tax collector the day you pay your first sub, and the payment rules bind you as the payer.

None of those five is a licence you apply for. That is the thing that catches people out. I have run this model for years, winning work and buying the trades in, and the compliance that actually bites is not the paperwork you get asked for at signup. It is the set of duties that attach automatically the moment you are the one holding the contract. If you want the model itself first, start with what construction arbitrage is. This post is the rulebook that comes with it.

Rule one: subcontracting moves the work, never the liability#

This is the rule everything else hangs off, and it is worth being precise about the words, because three different things get called the same thing.

Assignment transfers a benefit. The right to have the works built, or the right to sue if they are defective, is a benefit and can be assigned. Under English law the burden of a contract cannot be assigned at all - your obligation to actually perform, and to pay, stays with you.

Subcontracting transfers nothing. It delegates performance. Your primary obligation under the main contract sits exactly where it did before you engaged anybody. You have simply arranged for someone else to do the physical work you are still on the hook for.

Novation is the only mechanism that moves both the benefit and the burden, and it takes a fresh agreement signed by every party to the original contract. It is not something you can do unilaterally because a job has got away from you.

So when the client's kitchen is fitted badly, the client does not claim against your kitchen fitter. The client claims against you under the main contract. Most standard forms put this beyond argument with a clause making the contractor responsible for the acts, defaults and neglects of its subcontractors as though they were the contractor's own. You then have to go and recover from the fitter under the subcontract, which is a second, separate fight, and it is worth exactly nothing if that fitter has dissolved the company.

Subcontracting is a delegation of work and a concentration of risk. The work spreads out. The liability piles up on you.

That is not an argument against the model - it is the model. You are paid for carrying that risk. But it does mean the money you make is only real if you vet subcontractors properly and hold enough cover to survive the one that goes wrong. What actually happens when one does is its own subject, and I have written it up separately in what happens when a subcontractor messes up.

Rule two: check whether your contract lets you subcontract at all#

If a contract says nothing about subcontracting, the default position in English law is that you may delegate performance without asking anyone. Very few contracts say nothing.

Client-drafted agreements and standard forms commonly require the client's written consent before you subcontract any significant part of the works. Beyond a bare consent clause, the variations worth reading for are the ones that cost you time rather than permission: named trades that have to be pre-approved before they set foot on site, minimum insurance levels the subcontractor itself has to hold, and accreditation requirements that flow down from the main contract to everyone below it.

Three practical points from doing this.

• Read the subcontracting clause before you sign, not when you need it. It is usually two paragraphs and it decides whether your whole delivery model is available on that job.
• Get consent in writing and keep it. A verbal "yes, fine" from a site contact is not much use eighteen months later in a defects argument.
• Where consent is required, ask early. Consent clauses are often qualified so that consent cannot be unreasonably withheld, but a reasonable client still needs time to consider who you are proposing.

The related question of whether you are allowed to sub out everything rather than some of it is a different one with a different answer, and I have covered it in full in can a general contractor subcontract all the work.

Rule three: the safety duties that land on you whether or not anyone appoints you#

This is the rule that carries real legal weight and gets the least attention.

Under the Construction (Design and Management) Regulations 2015, where a project involves more than one contractor - which is every job where you bring in a second trade - the client must appoint a principal contractor in writing. The principal contractor plans, manages and monitors the construction phase, coordinates health and safety during it, produces the construction phase plan, runs induction, provides welfare facilities and keeps unauthorised people off the site.

Here is the part that matters for anyone working for householders. Regulation 7 deals with domestic clients, and it does two things. It moves the client's own duties onto the contractor, or onto the principal contractor where there is more than one. And where a domestic client fails to make the appointments the regulations require, it provides that "the contractor in control of the construction phase of the project is the principal contractor".

Read that again if you work in domestic property. You are not appointed principal contractor by a homeowner who has never heard of CDM. You simply are the principal contractor, by operation of law, because you are the one controlling the site. The duties do not wait for paperwork, and they cannot be subcontracted away to the trades doing the work.

Rule four: CIS makes you a collection agent the day you pay your first sub#

The moment you pay subcontractors for construction work you are a contractor for the purposes of the Construction Industry Scheme, and the obligations run in a fixed order.

Register with HMRC as a contractor before you take on your first subcontractor. Verify each subcontractor with HMRC before you pay them. HMRC then tells you the rate, and this is worth being clear about: you do not choose it and the subcontractor does not choose it. It is 20 per cent for those registered and verified, 30 per cent for those who are not, and nil for subcontractors holding gross payment status, which requires passing HMRC's turnover, compliance and business tests. File returns monthly and keep the records.

Two details that cost people money. The deduction applies to the labour element only - genuine materials costs come out of the figure before you calculate anything, so deducting on the gross invoice overpays HMRC and underpays your sub. And the scheme is about tax collection, not employment status. Getting CIS right does not make someone a subcontractor if the working relationship actually looks like employment; that is a separate test and a separate penalty.

What you should pay subcontractors in the first place is a commercial decision rather than a legal one, and Contractor Club covers the day rate, price work and CIS maths of it for the paying side.

Rule five: the payment rules bind you as the payer, not just as the payee#

Most contractors learn the payment provisions of the Housing Grants, Construction and Regeneration Act 1996 as a shield. Once you hold the contract and engage subcontractors, the same regime points at you.

The clearest example is section 113, which makes a provision conditioning payment on the payer receiving payment from a third person ineffective, unless that third party is insolvent. In plain terms: a clause in your subcontract saying you will pay the trades when the client pays you is unenforceable. The trade can be paid late for lots of legitimate reasons, but "the client has not paid me" is not one the law will support, and building your cash flow on the assumption that it is will fail exactly when a client goes slow.

The exclusion that people reach for here does not usually help. The residential occupier carve-out in section 106 applies to a contract that principally relates to work on a dwelling which one of the parties to that contract occupies or intends to occupy as a residence. Your subcontract is between you and a trade. Neither of you lives there. The homeowner is not a party to it. So the subcontract sits squarely inside the regime even when your main contract with the homeowner sits outside it.

What the gate checks, and what the law checks#

This is where our own data says something that no compliance guide will tell you.

We track 557 UK routes into construction work - portals, frameworks, housing association supply chains, main contractor supply chains, insurer and facilities management networks - and we recorded what each one asks for at the registration stage. Of those 557:

• 246 capture insurance details
• 184 ask for a safety accreditation or scheme membership
• 80 capture CIS details
• 2 mention the CDM Regulations by name

Two. Out of five hundred and fifty-seven.

That gap is the whole point of this post. The gate checks what is easy to check at a registration screen: a certificate number, a policy value, a badge that some other organisation has already assessed. Those are proxies. The regulation that assigns you criminal duties, that puts you in front of the HSE if someone is hurt on your site, and that attaches to you automatically on domestic work whether anyone appoints you or not, appears by name on two registration forms in the entire landscape.

Nobody is going to ask you about it. It binds anyway.

The practical read is that passing a supplier registration is not the same as being compliant, and treating it as the same is how firms end up fully accredited and badly exposed. The registration tells a buyer you are insured and badged. It says nothing about whether you know who the principal contractor is on next Tuesday's job. If you are still building the stack, the insurance side is a per-contract decision rather than a one-off, and the sequence for getting from trade to contract holder is in going from subcontractor to main contractor.

The next step#

None of this makes the model harder than it is. Four of the five rules are one-time setup: read your contracts properly, register for CIS, get the cover, write subcontracts that do not contain a pay-when-paid clause you cannot enforce anyway. The fifth, the CDM duties, is an operating discipline rather than a form, and it is the one worth taking seriously because it is the one nobody at the gate will remind you about.

If you are setting the business up around this from the start, starting a property maintenance business in the UK walks the first ninety days including the registrations and what they genuinely cost.

This is general information about how the rules work, not legal advice on your contract. The subcontracting clause in front of you is the one that governs, and on anything material it is worth an hour of a construction solicitor's time.

Last checked: 14 August 2026.