Car Finance for Construction Workers Paid Through CIS
Getting a Car on Finance When You Work on the Tools
If you work in construction and get paid through the Construction Industry Scheme, you may have been told that car finance is harder for you. The truth is more encouraging. Plenty of lenders are happy to finance subcontractors, but they need to understand how you are paid before they can say yes.
This guide walks through how CIS income is treated, what paperwork helps, and what to watch for. No jargon, no pressure, just a straightforward explanation so you know where you stand before you apply.
Is This Guide Right for You?
This is written for self-employed subcontractors in the UK who are paid through CIS. Bricklayers, groundworkers, joiners, electricians, plasterers, plant operators and labourers who invoice a contractor and have tax deducted at source before payment lands in their bank account. It is also useful if you mix CIS work with PAYE shifts.
How CIS Changes the Finance Picture
Under the Construction Industry Scheme, your contractor deducts tax from your payments before you receive them and sends it to HMRC on your behalf. If you are verified with HMRC, that deduction is usually 20 percent. If you are not verified, it can be 30 percent. Materials you supply are normally excluded from the deduction.
This matters for finance because the money hitting your account is not your gross income, and it is not your final taxable profit either. You are still self-employed, so lenders assess you on profit after allowable business costs, not on the gross value of your invoices. That gap between what you invoice, what you are paid, and what you eventually declare is the single biggest source of confusion.
Being paid through CIS does not make you an employee, and it does not make you a credit risk. It simply changes the paperwork you use to prove what you earn.
Proving Your Income and Getting Approved
Most lenders want to see a consistent picture rather than a perfect one. Typically that means at least one full year of trading, though two years gives you access to a wider range of options and often better rates.
The documents that usually do the heavy lifting are your SA302 tax calculations or tax year overviews from HMRC, your CIS payment and deduction statements from each contractor, and three to six months of bank statements showing money coming in regularly. If you use an accountant, a short certificate confirming your net profit can help enormously.
From there the process is much the same as for anyone else. You choose a vehicle and a finance type, the lender runs an affordability and credit assessment, and you receive a decision. A soft search quote lets you see likely terms without marking your credit file. If your income is seasonal or lumpy, be upfront about it. Lenders would far rather see honest variation than a surprise later.
Why It Can Be Worth Financing Rather Than Waiting
In construction, your vehicle is often your livelihood. Sites change, hours start early and public transport rarely lines up with a six o'clock start. A reliable vehicle protects your ability to earn, and spreading the cost over fixed monthly payments can be easier to manage than draining your working capital in one go.
Cash flow is the other consideration. CIS deductions mean money leaves your income before you see it, and any refund typically arrives only after you file your return. Keeping a cash buffer for quiet weeks and materials can be more sensible than emptying your savings on a used vehicle.
There may also be tax treatment to consider if the vehicle is used for work, particularly with a van rather than a car. That is a conversation for your accountant, but it is worth having before you commit, because the finance type you choose can affect how the cost is treated.
Weighing It Up
| Pros | Cons |
|---|---|
| Fixed monthly payments make budgeting easier around variable site work | Total cost is higher than paying cash because of interest |
| Keeps your savings free for materials, tools and quiet periods | You may need one to two years of accounts or tax calculations |
| Access to newer, more reliable vehicles with warranty cover | Missed payments can damage your credit file and risk repossession |
| Builds your credit profile when payments are made on time | Lenders assess net profit, which may be lower than expected |
| Wide choice of products, including hire purchase and PCP | Mileage and condition limits apply on some agreements |
| Vans and pickups can be financed as well as cars | Early settlement or ending an agreement early may cost you |
Points Worth Checking Before You Sign
The most common stumbling block is assuming your gross invoices count as income. If you claim heavy expenses to reduce your tax bill, your declared profit may look modest to a lender, and that figure is what drives affordability. It is worth knowing your net profit before you apply.
Check the APR and the total amount payable, not just the monthly figure. A low payment stretched over a long term can cost considerably more overall. Look at what happens at the end of the agreement, particularly with PCP, where a large final payment may be due if you want to keep the vehicle.
Be wary of anyone promising guaranteed approval or asking for upfront fees before a decision. Check the firm is authorised by the Financial Conduct Authority. And if the vehicle is mainly for work, confirm that the agreement and any mileage limits realistically match how far you actually travel between sites.
Other Routes You Could Consider
- Hire purchase - fixed payments across the term, and the vehicle is yours once the final instalment is paid. Often the simplest option for high-mileage work use.
- Personal Contract Purchase (PCP) - lower monthly payments with a larger optional final payment. Best suited to predictable, moderate mileage.
- Personal contract hire or leasing - you rent the vehicle for a set period and hand it back. No ownership, but predictable costs and often maintenance packages.
- Business contract hire or a van lease - designed for self-employed trades, with potential tax advantages worth discussing with your accountant.
- Unsecured personal loan - borrow, buy the vehicle outright and own it from day one. Approval leans heavily on your credit profile.
- Saving and buying outright - no interest and no agreement, though it ties up cash you may need for materials.
- Guarantor or specialist self-employed lending - useful if your trading history is short, but check the cost and the responsibilities involved carefully.
Common Questions from CIS Subcontractors
Can I get car finance if I am paid through CIS? Yes. Being paid through CIS does not disqualify you. Lenders treat you as self-employed and assess your net profit alongside your credit history and affordability.
How many years of accounts do I need? Many lenders look for at least one full year of trading. Two years usually widens your choice and can improve the terms offered.
Do CIS deductions reduce the income lenders use? Lenders generally work from your declared net profit rather than the payments after deduction. Your SA302 or accountant's figures are the reference point.
What if I have only just gone self-employed? It is still possible. Strong bank statements, a deposit, a clean credit file or a guarantor can all help support an application.
Can I finance a van instead of a car? Yes. Vans and pickups are widely financed, and there may be tax considerations to discuss with your accountant.
Will applying harm my credit score? A quote using a soft search does not affect your score. A full application involves a hard search, which is recorded.
Where Kandoo Fits In
Kandoo is a UK motor finance broker, so rather than approaching one lender and hoping for the best, you can see options from a panel of lenders in one place. We are used to self-employed and CIS applications, so we can explain exactly which documents to gather and match you with lenders comfortable with variable income. Our initial quote uses a soft search, meaning you can explore what is realistic without marking your credit file.
Important Information
This article is general information only and is not financial, tax or legal advice. Your circumstances are unique, so consider speaking to an accountant or a qualified adviser before committing to any agreement. Finance is subject to status, affordability checks and lender criteria. Rates and terms vary. Missing payments may affect your credit file and could result in the vehicle being repossessed.
Buy now, pay monthly
Buy now, pay monthly