Government cracks down on ‘False Self Employment’ – 08/05/2014

Workforce Unlimited has always employed temporary staff through PAYE but there are some agencies that treat their temps as though they were self employed, being paid through Umbrella Companies and these agencies and their temps will be affected by this new legislation.

The new rules have been introduced to cut down on false self employment arising from the way employment agencies engage and supply construction workers. It is estimated that around 200,000 construction workers and 50,000 others currently work as subcontractors for agencies under contracts that, before April 2014, allowed them to be treated as self employed for tax purposes. This was due to a ‘substitution clause’, stating that someone else could be sent to do the same work. Before the new rules were introduced, an agency only needed to treat a construction worker as an employee for tax purposes if the construction worker was obliged personally to carry out the work themselves. However, the new rules have introduced measures that have closed this loophole, so that agencies are required to put these construction workers on the payroll and deduct PAYE and National Insurance Contricutions (NICs) as though they were employees. Agencies are also required to pay employer NICs for these construction workers. The Federation of Master Builders (FMB) has warned that the additional payroll costs are likely to be built into agency contracts for the supply of construction workers and passed on to construction firms.

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