DS got a job but told he will be self emoyed - is this legit?

[WitzEnders]

DS (18) has been offered a job by a local builder. Great, he's not academic but is good with his hands and a real grafter.

The boss has told him he will be "self employed" and needs to sort out his own tax and NIC.

I've never been in this position so did a quick Google and I don't think DS meets HMRC criteria for s/e. Is this just a way for his boss to avoid paying employers NI, holidays and pension?

Any advice would be much appreciated.

Honestly it's nothing to stress about I do it for my dh tax return. It's easy to register and easy to complete the return as others have said most if not all and often too much tax is already paid at year end.

As others have said it sounds like a CIS position. They'll deduct 20% off all labour and pay HMRC. Each year he'll then fill a tax return in and the balance will be repaid to him 😊

For the majority of any other industries, I would say this was dodgy, but I know its normal for the construction industry

Yes it’s normal in building trade. My partner works like this. Not all will use CIS scheme either although it’s easier if they do. Make sure your son keeps all his work related receipts (clothes, boots, any tools he buys himself) and either invoice his boss or ask for payslips. I usually keep a running spreadsheet for my partner (he’s useless and I want to make sure it’s right!) then when it comes to tax return time you basically answer a load of tick box yes/no questions then fill in a box with your income and a box for anything you’ve got receipts for. There’s a box where you enter CIS contributions or invoice total I can’t remember. Basically if I can do it he’ll be fine!

Oh thank you, you lovely lot - I feel much better. They're offering him such a good rate, I thought it was too good to be true!

Thank you for the links!

If this is a CIS arrangement then your DS will need to contact HMRC to register as a sub-contractor, he'll get a UTR number & his "boss" will use this to verify that he is registered on the scheme & how much tax to deduct (until this is done he'll get 30% deducted).

Each week/month your DS should receive a Payment & Deduction statement showing the top line, deduction & payment amounts - he needs to keep these.

As others have said it's very common in the construction industry but generally someone your DS's age would be taken on as an apprentice & I'd be wary of him being asked to go self-employed with no experience as that's usually dodgy and any decent contractor would have discussed CIS with your DS if that's what they were looking for - it's likely they want to pay your DS in cash then claim that he should've been keeping some back for tax & NI and it's not their problem when HMRC come knocking. Don't let him sign anything until you've seen it - I've known unscrupulous contractors get young ones to sign a declaration saying they're responsible for their own tax & NI in a bid to absolve themselves of responsibility.

My husband has worked on and off in the building industry and its very common. It's a pain in the backside and a general rule of thumb from DHs experience is that any boss looking you to go self employed generally doesn't treat you well, will cut corners and let you go very quickly.

While this is completely normal in the industry it’s not right at all. Contractors get away with this shit all the time. Your DS won’t be doing anything wrong, it’s up to the contractor to determine his employment status for tax purposes. It’s just shit and it’s exploitative. Google Pimlico plumbing employee court case, it’s very interesting reading. CIS rates of pay might be slightly higher but the lack of job security, paid leave, paternity pay, pensions, sick pay etc etc, is just not worth it.

This is exactly how DP’s job works, he’s a builder with another contractor. He has 20% taken out each month, saves all receipts for boots/tools/travel for work etc, files a tax return at the end of year and usually gets around £2k back as a rebate

While this is completely normal in the industry it’s not right at all. Contractors get away with this shit all the time. Your DS won’t be doing anything wrong, it’s up to the contractor to determine his employment status for tax purposes. It’s just shit and it’s exploitative
No it really isn't.

If nobody else has mentioned it, one of the first he'll have to do is pass his Health and Safety test. His boss might guide him through it and book the test on his behalf, but if not, you'll be able to help him. It's not hugely difficult, but it is absolutely vital that he has it.

Totally normal in the construction industry - DH is in the same position and it's perfectly legitimate.

They pay 20% tax for him and writes it on his tax forms when he does his expenses. Some years he gets money back, some years he owes money depending on his expenditure.

He gets a higher rate of pay to compensate for lack of holiday/sick pay.

Yes as others have said he’ll be CIS. His boss will deduct 20% for tax. He’ll do his own tax return and usually get a rebate. National insurance is usually paid quarterly.

@AhDiddums

While this is completely normal in the industry it’s not right at all. Contractors get away with this shit all the time. Your DS won’t be doing anything wrong, it’s up to the contractor to determine his employment status for tax purposes. It’s just shit and it’s exploitative. Google Pimlico plumbing employee court case, it’s very interesting reading. CIS rates of pay might be slightly higher but the lack of job security, paid leave, paternity pay, pensions, sick pay etc etc, is just not worth it.

It's not exploitative at all and it's totally 100% worth it for many people.

DH earns way way over the regular employed wage - even if you factor in sick pay, pension (which he pays into privately) and holiday pay, he's still financially much better off than people on the same site who are employed.

It also means he has much more flexibility with regards to jobs, time off and much much more.

He's been employed and self-employed in the same industry and would never go back go the former.

Good luck to your ds, he also needs to look at health and accident insurance.

@Whinginadeville and @icedcoffees In our case it was totally exploitative and unethical. That is very often the case. The lawyers and courts that we’ve been working with must agree as we’ve just been paid a £30k settlement. Very often people are taken on as CIS contractors but work exclusively for one company. Wearing their uniform, driving their vehicles, working set hours and answering to a boss but without any of the perks of employment. I’ve started an anonymous forum online and I would say at least 80% of the subcontractors that are coming forward with their stories should be employed for tax purposes. Not CIS. When the scheme is used correctly it is great but most of the time it is not used correctly and contractors use it as a way to get out of the hassle of being an employer.

@copsford

Whilst common it's still shit

It is shit. No paid holiday or sickness, no pay if there isn't any work/it's raining. No employers NI contribution, no working place pension, no job security, the offset on reclaiming your workwear etc does not compensate.

This is how my job works - not construction. Yes I am totally unable to send someone else in my place but it's how the industry works.

It's been a massive win for me apart from the absence of sick/holiday pay - hang on to every receipt, work out exactly what is tax refundable (loads!), pay private pension and at the end of the year I have a tax refund. Has been better for me than employment and I was employed by an industry known for having good conditions.

[quote CovidIsADick]**@Whinginadeville* and @icedcoffees* In our case it was totally exploitative and unethical. That is very often the case. The lawyers and courts that we’ve been working with must agree as we’ve just been paid a £30k settlement. Very often people are taken on as CIS contractors but work exclusively for one company. Wearing their uniform, driving their vehicles, working set hours and answering to a boss but without any of the perks of employment. I’ve started an anonymous forum online and I would say at least 80% of the subcontractors that are coming forward with their stories should be employed for tax purposes. Not CIS. When the scheme is used correctly it is great but most of the time it is not used correctly and contractors use it as a way to get out of the hassle of being an employer.[/quote]
Completey agree.

You need to check that it is CIS scheme and not just casual cash in hand. Has he got his CSCS card?

Its very common my friend is a nursery nurse and she had this arrangement too.

Call HMRC for advice. Lots of differing opinions on here best to get it from them. Will be a long wait in the phone but I have always found the advisers helpful.

I'm a nurse and got a job working for an agency (a good few years ago now). I was offered two options- be employed under PAYE, or use an umbrella company who sorted everything out for me. I went PAYE as I thought it would be a hassle otherwise however some of the other nurses I met said it worked out that they made slightly more being under the umbrella company.

Anyway, my point is that he can employ a company to do all the hard work for him. I won't comment on the legitimacy of being self employed in the building trade as it's not a sector that I know anything about.

No paid holiday or sickness, no pay if there isn't any work/it's raining. No employers NI contribution, no working place pension, no job security, the offset on reclaiming your workwear etc does not compensate.

But that's not the only benefit, is it?

If you work under the CIS scheme you are free to be much more picky as to what jobs you do. You can choose when you take your days off and time off, what time you come home etc. DH earns more than enough to cover sick days, holidays, early finishes to take the dog to the vet etc.

It might not work for everyone but it does work really well for some. Too many people aren't clued up on their rights and responsibilities, though, and that goes for employers, employees and subcontracters.

My son has finally managed to get a job doing house clearance (social housing) and cleaning.
The company want him to register as self-employed, dbs, insurance. He has to buy his own uniform.
Been an arse ache to sort
His insurance has to be public liability up to a certain amount and we included personal insurance on top