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Thu December 13 2018

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Can half the UK construction industry really be self-employed?

31 Jul Forty-nine percent of the UK construction industry’s workforce is officially self-employed – sort of – latest tax office numbers reveal.

The Treasury is losing millions, Unite says
The Treasury is losing millions, Unite says

A Freedom of Information request made by the Unite union to HM Revenue & Customs revealed that 1.12 million construction workers were paid via the Construction Industry Scheme (CIS) in 2017/18. This is a 4% increase on the figures for 2016/17.

CIS is the stand-alone tax scheme for the construction industry. Under the scheme, workers are classified as self-employed but they are taxed at source. Opponents of the system, including trades unions, regard the vast majority to be “bogusly self-employed”.

In 2014 the government introduced measures designed to crack down on bogus self-employment in the construction industry, by barring construction workers operating via engagers (employment agencies and payroll companies) from being self-employed

Since 2014 there has been an 18% per cent increase in workers operating via CIS.

This indicates that the government’s crackdown on bogus self-employment has failed, Unite says.

In total, 49% of the industry’s 2.29 million workers were paid via CIS last year.

Following the 2014 reforms, the construction industry moved to employing many workers via payroll (or umbrella) service companies. The government estimated in 2015 that there were 260,000 workers paid in this manner.

Union campaigners assert that the principal winners from the CIS scheme are employers who avoid paying national insurance contributions (13.8% of a worker’s eligible earnings). The self-employed pay slightly lower levels of national insurance but don’t get holiday pay and have fewer employment rights.

Unite assistant general secretary Gail Cartmail said: “These latest figures are a damming indictment of the failure of the government to deal with rampant bogus self-employment in construction. Bogus self-employment is costing the exchequer millions in lost revenues and amounts to a huge hidden subsidy to construction employers.

“The government has clearly lost control of tackling bogus self-employment in construction, resulting in the routine exploitation of workers. The entire system needs to be radically reformed so that workers are either genuinely self-employed or paid via a standard PAYE format.”

MPU

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