Government increasing NI contributions for 200,000 construction workers from April

Following the introduction of new rules set out in the draft Finance Bill 2014, 200,000 construction workers employed through agencies will be subject to tax and employee National Insurance Contributions (NICs) from 6 April 2014.

The current PAYE and National Insurance (NI) rules specify that a self-employed worker finding work through an agency is still self-employed and should be taxed as such, meaning that the worker pays an NI contribution of 9% and the agency has no NI liability.

The new legislation states that, if the worker personally carries out the work or is involved in the provision of the services, payments will have to be put through the payroll and the worker will have tax and employee NICs deducted prior to payment. This will result in the worker’s NI contribution rising from 9% to 12% and the agency gaining a new NI liability of 13.8%. HM Revenue and Customs expects to raise an additional £520 million in tax in the next financial year following the introduction of the new rules.

Further information regarding the draft Finance Bill 2014 can be found here: www.gov.uk/government/news/finance-bill-2014-draft-legislation-to-be-published-today

For advice on the new rules for temporary workers and support on matters such as CIS, PAYE and tax status BWF members can receive advice on the Tax Helpline provided by Baker Tilly on behalf of the NSCC. Calls are diverted via the BWF (0844 209 2610) to our tax helpline experts to ensure our members get the best advice as rapidly as possible.