CIS Tax Service & Payment Solutions for Construction Industry Workers
Changes to the legislation on self-employed construction worker
– from 6 April 2014
The government are clamping down on what they see as "False self-employment" in the construction industry. Many construction companies used to pay their subcontractors through third party intermediaries providing contractor payroll services or similar.
This meant that the construction company avoided the risks that the worker might be considered by HM Revenue & Customs as an employee, and the subcontractor paid tax on a self-employed basis. Changes to the rules mean that, since 6 April 2014, the subcontractor will be taxed as if they are an employee.
That means the subcontractor receives far less net pay, or the cost to the construction company increases – neither of which is very satisfactory, especially given the current issues facing the construction industry.
However, there are other ways of paying subcontractors, one or other of which might suit your circumstances. Nopalaver Group can advise on the solution that would best suit your needs – but you should act quickly to reduce your costs and risk of liability.
NB If you pay your subcontractors direct, the changes to the legislation don't affect you, but it is clear that this is just part of a clamp down on "false self-employment" in the construction industry. It would be wise to review your existing arrangements to ensure that they would stand up to scrutiny by the Revenue. We offer free a free review of your contracts and working arrangements.