Construction industry workers are often classified as self-employed. This means that as far as employment rights go, they have very little protection under employment law. There are many people working in the construction industry who should be treated as an employee but are being treated as self-employed incorrectly. Even where they are being treated as self-employed correctly, it is important to note that employment law status is different from tax law status.
Tax law only recognises two types of status — employed and self-employed. For example, an electrician working for a building contractor could be a worker for employment law purposes even if they are self-employed for tax law purposes. If you need help understanding your employment law status you can contact ACAS for confidential and free support and advice. Skip to main content. Updated on 16 July Do all workers in the construction industry automatically pay tax under the CIS? No — you should only pay tax under the CIS if you are genuinely self-employed.
Contractors have an obligation to decide if their workers are employed or self-employed. How do I know whether to register under the Construction Industry Scheme?
Example: Oscar Oscar is a self-employed bricklayer. Example: Lee Lee lives in England, he is registered as a self-employed CIS subcontractor but is not using the gross payment scheme. Will I get payslips? What about expenses? Food for sustenance The cost of food and drink is not usually an expense incurred for business purposes, since everyone must eat in order to live.
Having somewhere to live The cost of domestic living accommodation is not allowable, although where a business trip necessitates one or more nights away from home, the hotel accommodation and reasonable costs of overnight subsistence may be deductible. Use of home as office There are two ways to calculate costs associated with using your home as an office, these are covered on our page: What business expenses are allowable?
Travelling to work If you tend to work at one or two different sites during the year and there is a pattern — these one or two sites will be your normal working place and the cost of travelling between home and such places will likely be disallowed, as it is just ordinary commuting. Travel expense: Examples Daniel works for an asbestos removal contractor. Should I use an agent?
What if I become a Limited Ltd company? What if I become VAT registered? What employment rights am I entitled to? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back?
How do I claim back tax if I complete a tax return? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance PPI pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Adult Specified Childcare credits? What is Scottish income tax? What is devolution?
Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? What if I have a tax credits overpayment? Working through a limited company What is the national minimum wage? How do I work out my tax? How is tax collected on taxable state benefits? How do I check my coding notice? What tax do I pay on redundancy payments? Termination payments on leaving the armed forces Employment benefits and expenses What are benefits-in-kind?
What payments and benefits are non taxable? What if I incur expenses in relation to my job? What travel expenses can I claim? What if I use my own car for business purposes? Payroll giving Allowances and expenses paid to armed forces personnel and deductions from their income Pensions and employees What is automatic enrolment for employees? What National Insurance do I pay as an employee?
How do I repay my student loan? What if I do not pay enough tax? Registering as a self-employed subcontractor in construction CIS Subcontractor. CIS Subcontractor. Self-employed subcontractor tax deductions The scope of CIS Registering as a self-employed subcontractor in construction Failing to register as a subcontractor Double taxation Identity fraud Inflated refunds and unscrupulous advisers Employment status issues: are you employed or self-employed?
Failure to register as a contractor when paying people who help you on a job. The most important reason why you need a UTR number is for completing self-assessment tax returns — but there are other reasons too.
Furthermore, if you are self-employed and have not notified HMRC — and have therefore not received a UTR number — this too can be dangerous. If HMRC finds out, you may have to pay a hefty fine and potentially face criminal prosecution. You will automatically be registered for a UTR number when you first register for self-assessment tax returns on HMRC or launch a limited company.
You should notify HMRC online as soon as possible after becoming self-employed. Alternatively, you can fill in the form, print it and then post it to HMRC.
This can take up to ten days to get to you. Upon receiving your code, you need to register your online tax account using your activation code. You have a maximum of 28 days to this before your activation code expires.
There are certain pieces of information you must know in order to register for a UTR number. This includes:. This is so that HMRC can identify which companies owe what in terms of tax.
Like a personal UTR, a company UTR is 10 digits long and will be issued to you when you register your limited company. Be sure to keep this number on file, as you will need it for a variety of tax purposes in the future, including business taxes, tax returns, and corporation tax. You don't need to be an expert to complete your self assessment tax return. Blog content is for information purposes and over time may become outdated, although we do strive to keep it current.
It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC. Select the income you receive and follow the hints and tips for potential tax savings.
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