Treasury Proposes New Construction Tax Regime

Hard on the heels of several cases dealing with whether builders on construction sites are employed or self-employed for employment law purposes, the Treasury has announced yet another review of the employment status of construction workers for tax purposes.

The review, only a few years after the system of taxation of workers in the building industry was overhauled, is designed to address the problem of ‘false self-employment’. This occurs when workers are treated as self-employed for Income Tax and National Insurance purposes despite the fact that the way in which the work is carried out on a day-to-day basis demonstrates that there is an employment relationship.

The Treasury’s proposals would treat all workers in the construction industry as employed except those who:

• provide the plant and equipment required for the job that they have been engaged to carry out. This would not include normal ‘tradesman’s tools’, as these are traditionally supplied by tradesmen;
• provide the material necessary to do the work; or
• provide other workers to carry out the work under contract and are responsible for paying subcontractors.

The consultation document can be viewed here. Consultation closes on 12 October 2009.

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