BUSINESS GUIDE

Managing Electrical Subcontractors UK: Complete Guide

How to check competency and insurance, verify CIS registration, set up written subcontract agreements, manage day rates vs measure-and-value, control quality on site, withhold retention, deal with poor performance, and navigate IR35.

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14 min readUpdated 2026-05-18Andrew Moore, Founder of Elec-Mate

Written and reviewed by Andrew Moore, founder of Elec-Mate, against BS 7671:2018+A4:2026, IET Guidance Note 3 and the IET On-Site Guide.

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Key Takeaways

  • 1Always verify subcontractor competency via NICEIC, NAPIT, or ELECSA online registers before they set foot on site — verbal assurances are not sufficient.
  • 2Subcontractors working in the construction industry must be registered with HMRC under the Construction Industry Scheme (CIS). You as the contractor must verify their CIS status before making payment.
  • 3A written subcontract agreement protects both parties — it should cover scope, rate, payment terms, retention, liability, and termination rights.
  • 4IR35 (off-payroll working rules) applies where a subcontractor working through a limited company would otherwise be deemed an employee. Since April 2021, medium and large businesses are responsible for determining IR35 status.
  • 5Retention — typically 5% of the contract value held for six to twelve months — protects you against defects discovered after practical completion. Always include retention terms in your subcontract agreement.
01 · Business Guide

Checking Insurance and Competency Before Work Starts

Your reputation is on the line when a subcontractor works under your name. A single poorly wired installation or missed test can cost you a client, a scheme registration, or worse. Verifying competency and insurance before work starts is non-negotiable.

  • Scheme registration check — verify the subcontractor is currently registered with NICEIC (niceic.com), NAPIT (napit.org.uk), or ELECSA (elecsa.co.uk). Registration must be current and must cover the categories of work being subcontracted. A contractor registered only for domestic work should not be subcontracted for commercial or industrial installations.
  • Public liability insurance — require a minimum of £1 million public liability insurance (£2 million or £5 million is common for commercial work). Ask for a copy of the certificate and check it is current and the limit is appropriate for the project. Note that the certificate shows the maximum liability per claim, not total per year.
  • Employers' liability insurance — if the subcontractor has any employees (including labour-only subcontractors they bring with them), they must hold employers' liability insurance with a minimum cover of £5 million. This is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969.
  • ECS Cards — check that all individuals working on site hold a current Electrotechnical Certification Scheme (ECS) Card at the appropriate grade for the work being undertaken. ECS Card verification is available via the ECS website or the ECS Check app.
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02 · Business Guide

CIS Registration Verification

The Construction Industry Scheme (CIS) is a mandatory HMRC scheme for contractors and subcontractors in construction, which includes electrical work. Getting CIS wrong exposes you to significant financial penalties.

  • Verify before payment — before paying a subcontractor for the first time, verify their CIS status online via HMRC's CIS Online service or ask your accountant to do so. HMRC will confirm whether they are registered and at what rate (gross, standard 20%, or higher 30%).
  • Deduction and payment to HMRC — deduct the appropriate rate from the subcontractor's labour element (not materials). Pay the deduction to HMRC by the 19th of each month and file your monthly CIS return. Keep records of all subcontractor verifications and payments for six years.
  • CIS deduction statements — issue the subcontractor with a written deduction statement within 14 days of the end of each tax month. This shows the gross payment, deduction, and net payment. They use this to offset against their own tax liability.
  • Penalties for non-compliance — HMRC can charge penalties of £100 to £3,000 per return for late or incorrect CIS returns, and can also hold you liable for unpaid tax if you have not correctly operated the scheme. CIS compliance is not optional.
03 · Business Guide

Written Subcontract Agreements

A handshake deal with a subcontractor is a liability waiting to happen. A written subcontract agreement, even a simple one-page letter of intent for small jobs, protects both parties and prevents disputes over scope, payment, and liability.

  • Scope of works — define precisely what is included and excluded. "First fix wiring on the ground floor" is better than "electrical work". Ambiguous scopes lead to subcontractors claiming extras and you disputing them.
  • Payment terms — specify the rate (day rate, price per unit, or fixed price), payment intervals (weekly, monthly, or on milestones), and the date by which invoices must be submitted. The Housing Grants, Construction and Regeneration Act 1996 gives both parties a right to interim payments on contracts over 45 days.
  • Retention — state the retention percentage (typically 5%), the amount held (of labour and materials, or labour only), and the release dates (half on practical completion, half at end of defects period — typically six to twelve months).
  • Termination rights — specify the grounds on which either party can terminate (e.g., persistent poor quality, failure to maintain programme, or insolvency) and the notice required. Without this, disputes about termination can be costly.
04 · Business Guide

Managing Day Rates vs Measure-and-Value

The way you pay subcontractors has a significant effect on your cost control and their incentive to perform. Choose the right model for the type of work being subcontracted.

  • Day rate — best for variable scope work — use day rates when the scope is genuinely unpredictable (fault finding, remedial work, service upgrades on older properties). Agree the rate upfront, require timesheets signed by your foreman, and set a maximum number of days without a variation order.
  • Measure-and-value — best for production work — use schedule of rates for repetitive production work (wiring multiple identical units or house types). Agree unit rates before work starts, measure completed work at agreed intervals (typically weekly or monthly), and pay only for measured work.
  • Fixed price — best for defined scope projects — where the scope is fully defined and risks are understood, a fixed price gives you cost certainty. Ensure the fixed price includes all foreseeable risks and that the subcontractor has priced the design accurately. Variations must be agreed in writing before work is carried out.
05 · Business Guide

Quality Control on Site

Your name is on the certificates, even when a subcontractor does the work. Quality control visits and clear standards protect your reputation and your scheme registration.

  • Inspection checklist — carry out a site inspection at key milestones (first fix completion, before boarding, second fix, test and commissioning). Use a written checklist that covers containment systems, cable identification, earthing and bonding, termination quality, and test results.
  • Test results review — require the subcontractor to provide test results (Schedule of Test Results, IR tests, RCD tests) as the job progresses. Do not wait until handover to discover testing has not been carried out. You are responsible for the accuracy of any certificates issued under your scheme registration number.
  • Photographic records — take photographs at key stages (consumer unit before and after, earthing arrangement, any buried cables before boarding over). These protect you if queries arise later and demonstrate diligence to your scheme body if audited.

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06 · Business Guide

Withholding Retention

Retention is a percentage of the contract value withheld until defects identified during a defined period after practical completion have been rectified. It is a standard feature of construction subcontracts and protects you against defective work discovered after the subcontractor has left site.

  • Typical retention rate — 5% of the contract value is standard for most electrical subcontracts. On a £20,000 subcontract, £1,000 is retained. Half (£500) is typically released at practical completion; the other half at the end of the defects liability period (six to twelve months).
  • Must be in the contract — you can only withhold retention if it is stated in the subcontract agreement. Withholding retention without a contractual right to do so is a breach of contract and the subcontractor can refer the dispute to adjudication.
  • Using retention for defects — if the subcontractor fails to rectify defects after written notice, you can use the withheld retention to fund a third party to carry out the remedial works. Document everything and keep invoices for the remedial work carried out.
07 · Business Guide

Dealing with Poor Performance

Poor quality work, repeated absences, or failure to maintain programme are the most common reasons to terminate a subcontract. Acting early and following the correct process prevents the dispute escalating.

  • Raise issues immediately in writing — verbal warnings are forgotten. A simple email or WhatsApp message noting the issue and expected standard creates a paper trail. Follow up with a formal written notice if the issue continues.
  • Termination notice — most subcontracts include a right to terminate for material breach. Issue a written termination notice citing the specific grounds, giving the notice period stated in the contract. Take care not to terminate wrongfully — if your grounds are not watertight, you may end up owing the subcontractor for work done.
  • Secure the site — when terminating, take immediate steps to secure the site, photograph the state of the works, and take possession of any materials you have paid for. This prevents disputes about what was and was not completed at termination.
08 · Business Guide

IR35 Considerations for Electrical Subcontractors

IR35 — now formally the off-payroll working rules — targets arrangements where an individual provides services through a limited company but is effectively working as an employee. It is relevant when you engage a subcontractor who operates through a personal service company (PSC) rather than as a sole trader.

  • Who determines status? — since April 2021, medium and large businesses (turnover above £10.2m or more than 50 employees) must determine the IR35 status of limited company subcontractors and issue a Status Determination Statement (SDS). Small businesses are exempt — IR35 status determination remains the responsibility of the subcontractor's company.
  • Key IR35 indicators — HMRC looks at: whether you control how, when, and where the work is done (control); whether the subcontractor can send a substitute (substitution); and whether the subcontractor bears financial risk (financial risk). An electrician who works set hours, uses your equipment, and works exclusively for you is likely inside IR35.
  • Practical steps — use HMRC's Check Employment Status for Tax (CEST) tool before engaging a limited company subcontractor. Keep a record of your determination. If in doubt, engage the subcontractor as a self-employed individual (sole trader) rather than through their limited company, which removes the IR35 complication entirely.
09 · Business Guide

Tools for Managing Your Subcontractors

Managing multiple subcontractors across different sites is a significant administrative burden. Elec-Mate's job scheduling and quoting tools help you keep track of who is working where and at what cost.

Allocate Jobs to Subcontractors

Use the Elec-Mate scheduler to assign jobs to subcontractors and track progress in real time. No more calls to find out where someone is — the job status tells you.

Certificates Under Your Scheme Number

When your subcontractor completes an installation, issue the certificate through Elec-Mate under your scheme registration. All test results are stored against the job record, making audits straightforward.

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