Subcontractor Agreement (UK)
This Subcontractor Agreement (the “Agreement”) is entered into on [Effective Date] by and between:
[Contractor Name], [Who Contractor], with its registered or principal address at [Contractor Address], [Contractor City], [Contractor County], [Contractor Postcode], England and Wales (hereinafter referred to as the “Main Contractor”); and
[Subcontractor Name], [Who Subcontractor], with their registered or principal address at [Subcontractor Address], [Subcontractor City], [Subcontractor County], [Subcontractor Postcode], England and Wales (hereinafter referred to as the “Subcontractor”).
The Main Contractor and the Subcontractor are referred to collectively as the “Parties” and individually as a “Party”.
BACKGROUND
The Main Contractor has been engaged to carry out works in connection with the following project: [Project Description] (the “Project”). The Main Contractor wishes to engage the Subcontractor to carry out part of the works at the site located at [Site Address] (the “Site”), and the Subcontractor agrees to carry out those works on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual obligations set out herein, the Parties agree as follows:
1. SCOPE OF SUBCONTRACT WORKS
1.1 The Subcontractor shall carry out and complete the following works (the “Works”) at the Site, in accordance with this Agreement, all applicable building regulations and statutory requirements, and any drawings, specifications, or schedules provided by the Main Contractor:
[Scope of Works]
1.2 The Subcontractor shall carry out the Works in a good and workmanlike manner using materials of adequate quality, fit for their purpose, and in accordance with the requirements of the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) and the CDM Regulations 2015.
1.3 The Subcontractor shall comply with all health and safety legislation applicable to the Works, including the Construction (Design and Management) Regulations 2015 (CDM 2015), and shall take all reasonable steps to protect the health and safety of all persons on or near the Site.
2. PROGRAMME AND COMPLETION
2.1 The Subcontractor shall commence the Works on [Commencement Date] and shall complete them by [Completion Date] (the “Completion Date”), subject to any extension of time granted in accordance with this Agreement.
2.2 The Subcontractor shall proceed with the Works regularly and diligently and shall comply with any reasonable programme issued by the Main Contractor from time to time.
2.3 If the Subcontractor fails to complete the Works by the Completion Date, the Main Contractor may, after giving 7 days’ written notice, deduct or claim from the Subcontractor any direct loss and/or expense caused to the Main Contractor by the Subcontractor’s delay, including any liquidated damages incurred by the Main Contractor under the main contract.
2.4 The Subcontractor may apply for an extension of time in writing, supported by documentary evidence, where completion is delayed by reasons beyond its control, including variations instructed by the Main Contractor, force majeure events, or the default of the Main Contractor.
3. SUBCONTRACT PRICE AND PAYMENT
3.1 The Main Contractor shall pay the Subcontractor the sum of [Subcontract Price] (the “Subcontract Price”) for the satisfactory completion of the Works, exclusive of Value Added Tax (VAT) where applicable.
3.2 Payment shall be made in accordance with the following schedule: [Payment Schedule].
3.3 The Parties acknowledge that this Agreement is a ‘construction contract’ within the meaning of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) (as amended). Accordingly:
- the Subcontractor is entitled to receive interim payments where the contract period exceeds 45 days (section 109, HGCRA 1996);
- the Main Contractor shall issue payment notices in accordance with section 110A of the HGCRA 1996;
- the Main Contractor may issue a pay less notice in accordance with section 111 of the HGCRA 1996 if it intends to pay less than the sum stated in the payment notice; and
- either Party has the right to refer a payment dispute to adjudication at any time under section 108 of the HGCRA 1996.
3.4 All payments shall be made in pounds sterling (£) by bank transfer to the Subcontractor’s nominated account.
4. CONSTRUCTION INDUSTRY SCHEME (CIS)
4.1 The Parties acknowledge that payments made under this Agreement may be subject to deduction of tax under the Construction Industry Scheme (CIS) as administered by HMRC pursuant to the Finance Act 2004 and the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045).
4.2 The Main Contractor shall verify the Subcontractor’s CIS status with HMRC before making any payment under this Agreement. Deductions shall be made at the rate specified by HMRC upon verification (gross payment status, 20% standard rate, or 30% higher rate), unless the Subcontractor holds a current gross payment status certificate.
4.3 The Subcontractor shall promptly notify the Main Contractor of any change to its CIS registration status, gross payment status, or UTR number.
5. DEFECTS LIABILITY
5.1 The Subcontractor warrants that the Works shall be free from defects in workmanship and materials at the date of practical completion.
5.2 If any defects appear in the Works within the defects liability period of [Defects Liability Period], the Subcontractor shall, upon written notification by the Main Contractor, promptly return to Site and rectify those defects at its own cost.
5.3 If the Subcontractor fails to rectify defects within a reasonable time after notification, the Main Contractor may arrange for others to carry out the rectification and recover the reasonable costs of doing so from the Subcontractor or from the Retention.
6. INSURANCE
6.1 The Subcontractor shall maintain, at its own expense and throughout the duration of the Works and the defects liability period, the following insurances with a reputable insurer authorised to carry on business in the United Kingdom:
- public liability insurance with a minimum indemnity limit of [Insurance Amount] per occurrence;
- employer’s liability insurance as required by the Employers’ Liability (Compulsory Insurance) Act 1969 (where the Subcontractor employs staff); and
- professional indemnity insurance where the Works involve design or professional services, in an amount appropriate to the nature of the services.
6.2 The Subcontractor shall, upon request, provide the Main Contractor with copies of current certificates of insurance evidencing such cover.
7. HEALTH AND SAFETY
7.1 The Subcontractor shall comply with all applicable health and safety legislation, including the Health and Safety at Work etc. Act 1974, the Management of Health and Safety at Work Regulations 1999, and the Construction (Design and Management) Regulations 2015 (CDM 2015).
7.2 The Subcontractor shall promptly report to the Main Contractor any accident, near miss, or dangerous occurrence on the Site involving persons carrying out the Works.
7.3 The Subcontractor acknowledges that the Main Contractor or a separately appointed Principal Contractor has overall responsibility for site-wide health and safety coordination under the CDM 2015, and the Subcontractor shall cooperate fully with any Principal Contractor or Principal Designer.
8. INDEPENDENT CONTRACTOR STATUS
8.1 The Subcontractor is an independent contractor and not an employee, worker, agent, or partner of the Main Contractor. The Subcontractor is responsible for its own tax affairs, National Insurance contributions, and compliance with HMRC requirements including the CIS.
8.2 Nothing in this Agreement creates a relationship of employer and employee between the Parties. The Subcontractor has no authority to bind the Main Contractor and shall not represent itself as having such authority.
8.3 The Subcontractor shall not engage sub-subcontractors to carry out any part of the Works without the prior written consent of the Main Contractor.
9. ADJUDICATION
9.1 Either Party has the right at any time to refer any dispute arising under or in connection with this Agreement to adjudication in accordance with section 108 of the Housing Grants, Construction and Regeneration Act 1996 (as amended).
9.2 Where the Parties cannot agree on the appointment of an adjudicator, the adjudicator shall be appointed by the Royal Institution of Chartered Surveyors (RICS) or such other nominating body as the referring party may select.
9.3 The adjudicator’s decision shall be binding on the Parties until the dispute is finally determined by legal proceedings or arbitration, or by agreement between the Parties.
10. GENERAL
10.1 Variations. Any variation to the scope of the Works must be instructed in writing by the Main Contractor prior to the variation being carried out. No payment shall be due for unauthorised variations.
10.2 Entire Agreement. This Agreement constitutes the entire agreement between the Parties regarding the Works and supersedes all prior negotiations and representations.
10.3 Amendments. No amendment shall be effective unless made in writing and signed by both Parties.
10.4 Third Party Rights. No person other than the Parties shall have rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.
10.5 Assignment. The Subcontractor shall not assign or sub-let any part of the Works without the prior written consent of the Main Contractor.
11. GOVERNING LAW AND JURISDICTION
11.1 This Agreement and any dispute or claim arising out of or in connection with it or its subject matter (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England and Wales.
11.2 Subject to clause 10 (Adjudication), each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Subcontractor Agreement as of the date first written above.
THE MAIN CONTRACTOR
Name: [Contractor Name]
Address: [Contractor Address], [Contractor City], [Contractor County], [Contractor Postcode]
THE SUBCONTRACTOR
Name: [Subcontractor Name]
Address: [Subcontractor Address], [Subcontractor City], [Subcontractor County], [Subcontractor Postcode]
Main Contractor
________________
Signature
Date: ________________
Subcontractor
________________
Signature
Date: ________________
What Is a Subcontractor Agreement (UK)?
A Subcontractor Agreement in the United Kingdom sets the scope of works, price, programme, and payment terms for the building or installation project, and takes its legal force from the Construction and Regeneration Act 1996.
In England and Wales, subcontractor agreements are primarily governed by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), as significantly amended by the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA 2009). The HGCRA 1996 introduced fundamental rights in relation to payment and dispute resolution for all parties in the construction supply chain: the right to stage payments where the contract period exceeds 45 days; the obligation to issue payment notices and pay less notices; and the statutory right to refer disputes to adjudication at any time.
Health and safety obligations are imposed by the Construction (Design and Management) Regulations 2015 (CDM 2015), which place duties on clients, designers, principal contractors, and subcontractors alike. The CDM 2015 require construction projects involving more than one contractor to appoint a Principal Contractor with overall responsibility for site-wide health and safety coordination.
The Construction Industry Scheme (CIS), introduced by Part 3 of the Finance Act 2004, requires main contractors to deduct tax at source from payments to subcontractors for construction work, unless the subcontractor holds gross payment status. The deduction rate (0%, 20%, or 30%) is determined by HMRC verification.
Our UK Subcontractor Agreement template is drafted for use in England and Wales and covers all key legal requirements, including scope of works, programme, price, interim payments, CIS deductions, retention, defects liability, insurance, health and safety obligations, independent contractor status, and statutory adjudication rights.
The legal framework governing the Subcontractor Agreement (UK) in United Kingdom draws on several key statutes and regulatory bodies. Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Parties executing a Subcontractor Agreement (UK) in United Kingdom should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2006 sets the foundational requirements.
When Do You Need a Subcontractor Agreement (UK)?
A formal, written Subcontractor Agreement is essential whenever a main contractor engages a subcontractor to carry out any part of a construction project. Proceeding on the basis of an oral agreement or a purchase order alone creates significant legal risk for both parties, particularly in relation to payment rights, variation claims, defects liability, and health and safety responsibilities.
A Subcontractor Agreement is needed in the following common situations: a main contractor engaging a specialist trade subcontractor (such as an electrician, plumber, groundworker, or steelwork installer) to carry out works forming part of a larger building project; a principal contractor appointed on a domestic extension or refurbishment engaging a specialist to carry out the structural, electrical, or roofing works; a civil engineering contractor engaging a subcontractor for earthworks, piling, or road surfacing; and a property developer engaging subcontractors directly for individual trades across a residential development.
A written agreement is particularly important because the HGCRA 1996 imposes mandatory terms on construction contracts. If a contract fails to include compliant payment provisions, the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended) will automatically apply in their place. Having a properly drafted written agreement allows the parties to tailor the payment, notice, and dispute resolution provisions within the statutory framework, rather than relying on the default Scheme terms.
A Subcontractor Agreement is also important for CIS compliance. HMRC requires main contractors to verify subcontractors before making the first payment and to deduct tax at the appropriate rate. A written agreement that records the verification reference number and specifies the CIS deduction basis provides valuable evidence of compliance in the event of an HMRC audit.
For projects notifiable under the CDM 2015 (those expected to last more than 30 working days with more than 20 workers simultaneously, or exceed 500 person-days), the Main Contractor or Principal Contractor must confirm that a Construction Phase Plan is in place before construction begins, and the Subcontractor’s obligations under CDM 2015 should be clearly set out in the subcontract.
What to Include in Your Subcontractor Agreement (UK)
A compliant and effective Subcontractor Agreement for use in England and Wales should address several key provisions.
The scope of works clause precisely defines what the Subcontractor is required to do. It should identify the specific trade or works package, reference any drawings or specifications, state the standard of workmanship required (e.g., compliance with BS 7671 for electrical works or BS EN 1090 for structural steelwork), and specify any materials or plant the Subcontractor is required to supply.
The programme clause specifies the commencement date and the completion date, and requires the Subcontractor to proceed regularly and diligently. It should address extension of time provisions (allowing the Subcontractor to apply for additional time where delayed by the Main Contractor’s instructions, variations, or force majeure events) and the consequences of failing to complete on time.
The price and payment clause is regulated by the HGCRA 1996 and must provide for a mechanism to determine the sum due at each payment due date, a final date for payment, and the right to issue payment notices and pay less notices. The clause should also address VAT and specify that payments are exclusive of VAT.
The CIS clause should confirm both parties’ registration status, record the HMRC verification reference, and specify the deduction rate applicable. It should require the Subcontractor to notify the Main Contractor of any change in CIS status.
The retention clause, if included, should specify the retention percentage (typically 3–5%), the conditions for release (e.g., 50% on practical completion, 50% on expiry of the defects liability period), and the interest payable if retention is not released on time under the Late Payment of Commercial Debts (Interest) Act 1998.
The defects liability clause specifies the period during which the Subcontractor is responsible for rectifying defects (typically 12 months from practical completion) and the Main Contractor’s right to engage others to make good defects at the Subcontractor’s cost if it fails to do so.
The insurance clause should require the Subcontractor to maintain adequate public liability insurance (typically £2m–£5m per occurrence), employer’s liability insurance under the Employers’ Liability (Compulsory Insurance) Act 1969, and any professional indemnity insurance where the works involve design.
The adjudication clause confirms the statutory right of either party to refer disputes to adjudication under section 108 of the HGCRA 1996.
The governing law and jurisdiction clause should specify England and Wales.
Additional compliance elements for a Subcontractor Agreement (UK) used in United Kingdom include: Under the Companies Act 2006, Companies House maintains the register of UK companies. Section 386 of the Companies Act 2006 sets accounting record obligations. The Competition and Markets Authority (CMA) enforces the Consumer Rights Act 2015. The Financial Conduct Authority (FCA) regulates financial services under the Financial Services and Markets Act 2000. The High Court of Justice has jurisdiction under the Senior Courts Act 1981. Forms-legal.com provides this template as a starting point for United Kingdom-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Subcontractor Agreement (UK) (United Kingdom) [Legal document template]. Forms Legal. https://forms-legal.com/uk/business/contracts/subcontractor-agreement-uk
"Subcontractor Agreement (UK) (United Kingdom)." Forms Legal, 2026, https://forms-legal.com/uk/business/contracts/subcontractor-agreement-uk.
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title = {Subcontractor Agreement (UK) (United Kingdom)},
year = {2026},
howpublished = {\url{https://forms-legal.com/uk/business/contracts/subcontractor-agreement-uk}},
note = {Free legal document template. Based on Companies Act 2006}
}Also available for these jurisdictions:
Frequently Asked Questions
The Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), as amended by the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA 2009), is the principal statute governing payment and dispute resolution in UK construction contracts. It applies to any ‘construction contract’ as defined in section 104 of the Act, which includes most agreements for the carrying out of construction operations in England, Wales, or Scotland. Key rights created by the Act include: the right to stage payments (section 109) where the contract duration exceeds 45 days; the obligation on the paying party to issue a payment notice no later than 5 days after the payment due date (section 110A); the right of the paying party to issue a pay less notice before the final date for payment if it intends to pay less than the notified sum (section 111); and the statutory right to refer any dispute arising under the contract to adjudication at any time (section 108). The Act also prohibits ‘pay when paid’ clauses (section 113), meaning the Main Contractor cannot withhold payment to the Subcontractor simply because it has not yet been paid by the employer. Any contract terms that purport to exclude or override the Act’s mandatory provisions are replaced by the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended).
The Construction Industry Scheme (CIS) is a tax deduction scheme administered by HMRC under Part 3 of the Finance Act 2004 and the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045). It applies to payments made by contractors to subcontractors for construction work. Before making the first payment to a subcontractor, the contractor must verify the subcontractor’s CIS status with HMRC. HMRC will advise one of three deduction rates: gross payment status (0% deduction, available to subcontractors who meet certain business, compliance, and turnover tests); standard rate (20% deduction, applied to most verified subcontractors); or higher rate (30% deduction, applied where HMRC cannot verify the subcontractor’s identity or registration). Deductions are made from the ‘labour element’ of the payment only — not from the cost of materials supplied by the subcontractor. The contractor must provide the subcontractor with a deduction statement (a ‘CIS voucher’ or monthly return) and report monthly to HMRC. Subcontractors can offset CIS deductions against their income tax and National Insurance liabilities when filing their self-assessment tax return.
The Construction (Design and Management) Regulations 2015 (CDM 2015) implement the EU Temporary and Mobile Construction Sites Directive (92/57/EEC) into UK law and apply to virtually all construction projects in Great Britain, regardless of size. CDM 2015 places legal duties on several ‘duty holders’: the client, the Principal Designer, the Principal Contractor, contractors, and workers. As a contractor, the subcontractor has the following key duties under CDM 2015: to plan, manage, monitor, and coordinate its own construction work in relation to health and safety (regulation 15); to comply with directions given by the Principal Contractor (regulation 15); to cooperate with and assist the Principal Contractor in preparing and maintaining the Construction Phase Plan; to provide relevant information to the Principal Designer for inclusion in the Health and Safety File; to confirm that its workers are adequately skilled and trained; and to report accidents, near misses, or dangerous occurrences to the Principal Contractor and to the HSE under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) where required. For projects involving more than one contractor, there must be a Principal Contractor (usually the Main Contractor) with overall responsibility for site health and safety.
No. Under section 111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended by the LDEDCA 2009), a paying party may only pay less than the sum stated in the payment notice (or the subcontractor’s application for payment, in the absence of a payment notice) if it has served a valid pay less notice before the ‘prescribed period’ before the final date for payment. The prescribed period is specified in the contract or, if not, by the Scheme for Construction Contracts. A pay less notice must state the sum the paying party considers to be due, and the basis on which that sum has been calculated. If a valid pay less notice is not served in time, the Main Contractor is obliged to pay the full sum stated in the payment notice (or the subcontractor’s application). Failure to pay entitles the Subcontractor to suspend performance of its obligations under section 112 of the HGCRA 1996, provided it has given at least 7 days’ written notice of its intention to do so, and to refer the non-payment to adjudication.
Retention clauses — under which the Main Contractor withholds a percentage (typically 3–5%) of interim payments as security for the Subcontractor’s performance — are currently enforceable under English law, provided they are clearly drafted and do not conflict with the mandatory payment provisions of the Housing Grants, Construction and Regeneration Act 1996. The retention sum is typically held by the Main Contractor in its general funds and is not ring-fenced in a separate trust account (unlike some other jurisdictions). This means that if the Main Contractor becomes insolvent, the Subcontractor is an unsecured creditor in respect of any unpaid retention. This has historically led to significant losses for subcontractors when main contractors become insolvent. The UK government consulted on mandatory retention deposit schemes and the Building Safety Act 2022 conferred powers on the Secretary of State to introduce a retention scheme by secondary legislation, though as of 2024 no mandatory scheme had been introduced. Subcontractors should be aware of this credit risk when agreeing retention terms.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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