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Budget 2014: Self-employment crackdown

Budget 2014: Self-employment crackdown

Chancellor George Osborne has confirmed that plans to clamp down on tax avoidance, first revealed in his 2013 autumn statement, will take effect from April 2014. The regulations regarding self-employment are particularly relevant to the construction industry where agencies and intermediaries often provide self-employed site workers.

Since they are not subject to the usual PAYE (Pay As You Earn) system of income tax and national insurance collection, self-employed construction workers are often significantly cheaper than those employed directly by contractors and sub-contractors. However, the government estimates that around 300,000 workers in the construction sector are in false self-employment through onshore intermediaries, defrauding HMRC of more than £380m per annum. To combat this, the Budget states:

‘The government will amend existing legislation to prevent employment intermediaries being used to avoid employment taxes by disguising employment as self-employment.’

Although the industry of course supports reforms to prevent tax avoidance, organisations such as the UK Contractors Group had asked the Chancellor to delay the legislation’s introduction until 2015 to facilitate a smooth transition to new models of employment. With the UK construction workforce estimated at 2.2million people these relatively sudden changes are likely to cause disruption, with particular concern over projects where fixed prices have already been agreed. Moving forward, less-flexible employment regulations will raise costs for contractors and this will ultimately lead to increases in tender prices.

With potential disruption on existing projects and costs set to rise, it is more important than ever to ensure that your projects are well managed in terms of both budget and programme. Monaghans’ experienced Quantity Surveyors and Project Managers seamlessly adapt to market and regulatory conditions to manage projects efficiently and ensure delivery on time and on budget. If you have any concerns over how the new legislation could affect your projects, please do get in touch, we would be happy to advise you.