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Building work has its own tax plumbing, and accounting software for builders has to handle it. If you pay subcontractors, you are a contractor under the Construction Industry Scheme (CIS): you deduct tax from their pay, send it to HMRC and file a return every month. If you work for one, you are a subcontractor: deductions come off your invoices and you claim them back. Some builders are both. Add the VAT reverse charge for construction and the need to know which jobs made money, and a builder asks more of bookkeeping software than a typical small business does.
How we chose. For a builder the Construction Industry Scheme outweighs everything else, so we read the CIS wording for each of the 10 accounting tools in our UK data before looking at price, which comes from the engine behind our accounting software comparison. After CIS we weighted project tracking for job costing, receipt capture from site, and payroll for the day you take on staff. This guide compares general accounting software we list; specialist construction platforms with estimating and valuations exist, but they are not in our table. The table above opens at 15 invoices a month, one user, no employees and VAT registered; change any of them and it re-prices. Commission arrangements with vendors had no say in which builders' tools we picked.
What does a builder need from construction accounting software?
A UK builder needs construction accounting software to do four jobs: record CIS deductions on both sides, track the income and costs of each job, capture receipts from the van or the merchant's counter, and produce VAT returns that cope with the domestic reverse charge. Which of these matter depends on whether you pay subcontractors, work as one, or both.
GOV.UK sets out who must register for CIS: a business that pays subcontractors for construction work registers as a contractor, and anyone doing construction work for a contractor should register as a subcontractor. The deductions count as advance payments towards the subcontractor's tax and National Insurance.
That gives three common shapes of building business:
- Subcontractor only, such as a sole trader bricklayer or electrician working for main contractors. Your software records gross pay and the deductions taken from it, so the tax return gives the deductions back.
- Contractor only, such as a small building firm that hires trades in. Your software works out deductions, issues statements and, ideally, files the monthly return.
- Both, such as a builder who takes work from a main contractor and hires a plasterer for part of it. You need both sides in the same set of books.
Which accounting software handles CIS for contractors and subcontractors?
CIS support varies widely: some UK accounting software files the contractor's monthly return, some only calculates deductions, some charges extra for filing, and some has no CIS support at all. Here is every accounting provider we list, with our wording intact:
| Provider | CIS support |
|---|
| ANNA Money | No |
| Crunch | No |
| FreeAgent | Yes |
| FreshBooks | No |
| Pandle | No |
| QuickBooks Online | Yes |
| QuickFile | No |
| Sage | Yes (Standard) |
| Xero | Yes (filing add-on) |
| Zoho Books | Yes (returns: Professional) |
What the wording means, provider by provider:
- FreeAgent covers contractors and subcontractors, but it does not file the monthly contractor return; you prepare it in FreeAgent and submit it through HMRC's online service.
- QuickBooks Online has CIS on the plan our table prices, £16/mo (Simple Start), and its CIS page says it files CIS returns direct to HMRC at no extra cost.
- Sage has CIS from £43/mo (Standard), not on its entry plan.
- Xero calculates subcontractor deductions on every plan; submitting contractor returns is an optional paid add-on.
- Zoho Books tracks CIS contractors from its free plan and submits CIS returns from £20/mo (Professional, annual).
- "No" means our data shows no CIS support, so a builder on that software keeps CIS records elsewhere or relies on an accountant.
The contractor's side is where the deadlines bite. GOV.UK says the monthly return must reach HMRC by the 19th after each tax month, which runs from the 6th to the 5th, and a month with no payments still needs a nil return or an inactivity request. A return one day late costs £100, rising to £200 at two months, with larger penalties at six and twelve months. GOV.UK's guide to making deductions says you take nothing from a subcontractor with gross payment status, and you give each subcontractor a payment and deduction statement within 14 days of the end of the tax month, which is what your software should produce.
How subcontractors get CIS deductions back
A subcontractor gets CIS deductions back through the tax system, and accounting software for subcontractors needs to keep the gross pay and the deduction as separate figures so the claim adds up. The route depends on how the business is set up, and GOV.UK's guide to paying tax and claiming back deductions sets out each one:
| Business type | How the deductions come back |
|---|
| Sole trader or partner | On the Self Assessment return: total pay before deductions goes in as income, the deductions as CIS deductions, and HMRC takes them off your tax bill |
| Limited company | Through payroll: an Employer Payment Summary (EPS) with the year-to-date CIS deductions, sent alongside the Full Payment Submission, reduces the PAYE bill; not through the Corporation Tax return |
Keep the monthly payment and deduction statements each contractor sends you; GOV.UK names them as the record you need. A limited company also has to keep a record of the deductions it has used against its PAYE bill.
For a sole trader subcontractor the Self Assessment return is where the money comes back, so whether your software supports it matters:
| Provider | Self Assessment |
|---|
| FreeAgent | Yes |
| QuickBooks Online | Yes |
| Xero | No |
| Zoho Books | Yes |
A sole trader builder whose income before expenses passes the threshold for MTD for Income Tax also has to send quarterly updates from software; our guide to accounting software for sole traders covers those thresholds and dates, so this guide does not repeat them.
Job costing for builders: project tracking and site receipts
Job costing tells a builder whether each job made money, by setting the materials, labour and subcontractor costs against what the client paid. In general accounting software this sits under project tracking, and among our picks it ranges from every plan to the top plan only. Receipt capture matters as much, because the merchant's receipt is the cost record for the job.
| Provider | Project tracking | Receipt capture |
|---|
| FreeAgent | Yes | Yes (10/mo) |
| QuickBooks Online | Yes (Plus) | Yes |
| Xero | Yes (Ultimate) | Yes (Hubdoc) |
| Zoho Books | Yes | Yes |
| Sage | No | Yes (Standard) |
A plan name in brackets means the feature starts on that plan. FreeAgent tracks time and profitability per project on every plan; its receipt capture is capped per month, with unlimited capture a paid add-on. Xero's receipt capture runs through Hubdoc, its document tool. Prices are each vendor's published monthly figure, normally before VAT; we do not add or remove VAT. Plans and pricing checked October 2026.
Project tracking in a general ledger records costs and income against a job. It does not price a job before you win it, and it does not run stage valuations or hold retentions as a separate ledger. If you quote from drawings or claim in stages on larger contracts, that is the point where specialist construction software, alongside your accounting software, starts to earn its fee.
The VAT domestic reverse charge for construction services
Since 1 March 2021, the VAT domestic reverse charge has applied to most standard and reduced-rate building services supplied between VAT-registered businesses where the payment is reported under CIS. The supplier does not charge VAT; the customer accounts for it on their own VAT return. For a VAT-registered builder, the accounting software has to handle this on both sales and purchases.
HMRC's reverse charge technical guide sets out what changes in practice:
- Your invoice must say the reverse charge applies, with wording such as "Customer to pay the VAT to HMRC" and the reference "reverse charge".
- The customer adds that VAT to the output tax on their VAT return, then reclaims it as input tax under the normal rules.
- It does not apply to an end user, a VAT and CIS-registered customer who tells you in writing that they are not selling the work on, or to an intermediary who passes it to a connected end user. Domestic customers are outside it too.
- A small reverse-charge element can be ignored: if it is 5% or less of the whole supply's value, the guide says it can be disregarded.
We do not hold data on how each provider handles the reverse charge, so this guide does not say which of our picks does it well. When you trial any of them, raise a sales invoice and a purchase bill with reverse-charge VAT and check three things: that a reverse-charge VAT code exists, that the invoice prints the required wording, and that the figures land in the right boxes of the VAT return without manual adjustment. A subcontractor on the reverse charge also stops receiving VAT from contractors, which changes cash flow, so ask your accountant whether that affects how often you file.
Taking on staff alongside CIS
CIS subcontractors are not employees, but a building firm that takes on an apprentice, a labourer or an office manager runs payroll alongside CIS. GOV.UK says a contractor's monthly CIS return includes a declaration that the subcontractors listed are not employees, and a wrong employment status can cost up to £3,000. For a limited company subcontractor, payroll matters for a second reason: the EPS that reclaims CIS deductions goes through it.
Zoho Books has no payroll, and the other three picks sell it in different ways; our guide to accounting software for small business compares how each provider prices payroll once you employ staff.
Which accounting software should a builder choose?
Pick by how you work in construction, not by the price column alone:
- You are a sole trader subcontractor and file your own return: FreeAgent, which records CIS deductions and files Self Assessment, and costs nothing with a qualifying business bank account; on the cash basis it has no payroll, so check that before you take on staff.
- You pay subcontractors and want the monthly CIS return filed from your books: QuickBooks Online, which has CIS on the plan in our table.
- Your bookkeeper or accountant already works in Xero: Xero, adding the CIS filing option if you are a contractor.
- You want to see the profit on each job without a large monthly bill: Zoho Books, moving to £20/mo (Professional, annual) when you need to submit CIS returns.
- You quote from drawings, run stage valuations or hold retentions: a specialist construction platform alongside one of the above.
Whichever you choose, check the CIS wording in the table above against whether you are a contractor, a subcontractor or both, because that is where general accounting software differs most for builders.