What is driving the crazy labour costs??

[TheEconomista]

We've moved to a house that needs a lot of work. We're only looking at the essentials at the moment, but planning an extension in the next few years.

I cannot believe how much the cost of labour for all trades has risen. We've got quotes for decorating (basic), moving radiators (plumbing already in place) and installing a bathroom (small and not changing the layout). In all cases the labour is coming in at somewhere between £450 and £500 per day!! This is at least double what we were paying five years ago. I know cost of living has risen somewhat but this seems completely bonkers to me.

Is everyone else experiencing the same? And what's driving it if so? I can only imagine people are paying it as it seems consistent across trades.

@user1497207191
So they voted for Brexit. That of course has now slowed down house building! Their DC should question that! They can always retrain!

@user1497207191-polytechnics became universities in 1992. Well before Blair.

Like you Op, we’ve had some very high quotes for things that need to be done to our house. One of which was an eye watering quote to replace an existing conservatory.

But what I’ve noticed since the start of this year is we’ve been having a lot of calls from said companies/tradesman chasing us and offering lower prices. My gut feel is that they are pricing themselves out of jobs now, due to their high quotes, and are now willing to negotiate. I also think many homeowners, like us, will just sit tight for a while and put off non-essential works, as opposed to paying over the odds for work.

[quote Subbaxeo]@user1497207191-polytechnics became universities in 1992. Well before Blair.[/quote]
Yes I know, I didn't say it was Blair who did it.

Legalisation. Ie in the old days you could pay someone cash to do a job and it was done at a rate that was fair to both . Nowadays you have to digitalise all your accounts and most people don't have cash under the bed and are advised against it at the bank when they go to draw it out. So people dont pay in cash AND THAT Means builders have to pay tax and that's not cheap so that gets build into the price. if they are busy good builders the tax rate can be 40% or more and then there's 20% on for VAT so you are paying most of the price to the government, who have already taxed you on your earnings and are now taxing you on your spending too. ( sorry not had much sleep, that turned into a rant )

Im edge of London and paying £220 a day for an excellent decorator. This is discounted as he has just finished a fixed rate job and now is doing the whole house pretty much.
I have a plumber fitting three radiators (two in new positions and one just a replacement) and this will cost £500 which I anticipate being complete in half a day.
Small jobs a nightmare to get anyone to quote for but have just found a multitradesman who is cracking through them so I'm holding onto him for dear life!

For the life of me I cannot get anyone to provide an extension quote and garage conversion. It's a jughtmare at the moment for all the reasons pp have stated!

@sleepdeprivedhuman

Legalisation. Ie in the old days you could pay someone cash to do a job and it was done at a rate that was fair to both . Nowadays you have to digitalise all your accounts and most people don't have cash under the bed and are advised against it at the bank when they go to draw it out. So people dont pay in cash AND THAT Means builders have to pay tax and that's not cheap so that gets build into the price. if they are busy good builders the tax rate can be 40% or more and then there's 20% on for VAT so you are paying most of the price to the government, who have already taxed you on your earnings and are now taxing you on your spending too. ( sorry not had much sleep, that turned into a rant )

I think it's right that we move away from illegal tax evasion like that. The "black economy" is the largest component of the tax gap.

Anyway, even the expensive traders are still up for a bit of "cash in hand", in fact, some seem to hike the bill in the first place and then play the "cash" card to knock the VAT off. In the past six months, I've had a quote for £2,000 for scaffolding over half the house, £2,000 to repair a few dents/scratches on a car, skip hire for £150, all offering to knock off the VAT if cash. The worst is a fencing guy to replace a cracked concrete fence post wanting £300 for it, and then, as an after thought, saying "or £360 if you want to pay by cards or BACS as I'd have to charge VAT".

Thing is, it's not just the VAT being evaded, the trader won't be paying income tax nor NIC on it either, so they win out more than the customer.

It's about time HMRC got serious about the black economy. If "making tax digital" helps make that happen, then bring it on.

But what I’ve noticed since the start of this year is we’ve been having a lot of calls from said companies/tradesman chasing us and offering lower prices. My gut feel is that they are pricing themselves out of jobs now, due to their high quotes, and are now willing to negotiate. I also think many homeowners, like us, will just sit tight for a while and put off non-essential works, as opposed to paying over the odds for work.

I think this may be true. We were also recently bombarded with mail from companies and independent tradespeople who had taken our contact details from our planning application and wanted work. That hasn't happened in the past.

@TizerorFizz

It’s been estimated that 40% of our foreign labour force in building trades have left the country. You might remember that before Brexit, many trades people said they were undercut by foreigners. Now they are charging what they want. That’s Brexit in action.

Skilled tradesman actually getting a decent wage at long last. My step father now earns around 33% more than he did 18 months ago. No wonder he voted for Brexit (I didn't, but can now see why he did).

@user1497207191

That doesn't make sense. We also struggle with finding tradesmen and as a business owner, with huge delays due to imports.

We didn't three years ago...

It's about time HMRC got serious about the black economy. If "making tax digital" helps make that happen, then bring it on

It can’t touch your bank account, so can’t count towards any mortgage or rent calculations. So heavily disadvantages you there as every penny counts.

You can’t pay more than 4K down in cash for a car or any luxury goods or it has declared.
Even lots of high street shops are only taking card now.
It’s really not worth it, you can’t do anything with it.

Dh is a tradesman and gets paid in cash often, it’s more of a pain to deal with as it still gets paid in and accounted for.

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

Money laundering industries, so takeaways and car wash. Different story

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

The tradesman who gets paid in cash by customers in turn pays their suppliers and non registered "employees" in cash, so their workers evade tax and NIC too! The whole point in taking cash is NOT to bank it - i.e. avoid the "proof" or audit trail, hence why they want it to pay on to others who are likewise tax evaders.

@user1497207191

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

The tradesman who gets paid in cash by customers in turn pays their suppliers and non registered "employees" in cash, so their workers evade tax and NIC too! The whole point in taking cash is NOT to bank it - i.e. avoid the "proof" or audit trail, hence why they want it to pay on to others who are likewise tax evaders.

You can’t pay many suppliers in cash anymore. Staff won’t want wages in cash as they can’t declare it so can’t use it to get a mortgage, or rent a house.

@EvilPea

It's about time HMRC got serious about the black economy. If "making tax digital" helps make that happen, then bring it on

It can’t touch your bank account, so can’t count towards any mortgage or rent calculations. So heavily disadvantages you there as every penny counts.

You can’t pay more than 4K down in cash for a car or any luxury goods or it has declared.
Even lots of high street shops are only taking card now.
It’s really not worth it, you can’t do anything with it.

Dh is a tradesman and gets paid in cash often, it’s more of a pain to deal with as it still gets paid in and accounted for.

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

Money laundering industries, so takeaways and car wash. Different story

I agree with this. People who took large amounts of payments in cash pre-pandemic will have found this out to their cost when covid came.

If companies needed to put staff on furlough, they could only do so if they were already on the books (cash in hand staff are not recorded).

If companies needed to claim the covid grants based on last years turnover/profits, the figures available to such companies was lower than they would have been if they were honestly declaring, for those who used to take significant payments in cash.

Short answer is that self employed people should declare all income, record all expenses honestly and settle their taxes due like those of us on PAYE do!

Short answer is that self employed people should declare all income, record all expenses honestly and settle their taxes due like those of us on PAYE do!

Most do, some don't. It suits them not to for numerous reasons.

Re the covid grants, it was actually counter intutive. A builder with declared profits of £49k p.a. got circa £36k in grants but a builder with £51k p.a. profits got nothing. So, in fact, those who didn't declare all their income to keep their declared profits under the £50k higher rate threshold were massively rewarded for their tax evasion. Nice one Sunak!!

Same applies re VAT. Many one man bands will take undeclared cash in hand to keep their turnover below the £85k VAT threshold. For lots of businesses going £5k over the limit will cost them more than £5k in tax, nic and VAT, do they declare the £84k and pocket the excess as undeclared cash sales. to avoid having to register (and pay) VAT.

@Starseeking

I agree with this. People who took large amounts of payments in cash pre-pandemic will have found this out to their cost when covid came. If companies needed to put staff on furlough, they could only do so if they were already on the books (cash in hand staff are not recorded). If companies needed to claim the covid grants based on last years turnover/profits, the figures available to such companies was lower than they would have been if they were honestly declaring, for those who used to take significant payments in cash. Short answer is that self employed people should declare all income, record all expenses honestly and settle their taxes due like those of us on PAYE do!

None of that would have been in the thought process before covid. There was nothing to suggest a pandemic was imminent and nothing in the tax/benefit system to say how, or even if, there'd be covid support schemes. Furlough didn't even exist in UK tax/employment law so no one would have been planning their affairs around it!

But, yes, it may well be part of the thought process going forward if people think there may be more pandemics and more lockdowns/restrictions.

In fact, it could drive tax evasion, as the sole traders/freelancers who found themselves excluded may well arrange their affairs so that they'd be eligible in case it happened again with similar criteria, such as keeping profits below likely thresholds, converting from limited company to sole trader, etc. For some, it could drive behaviour, such as doing more cash in hand work and putting less through the books.

@EvilPea

You can’t pay many suppliers in cash anymore. Staff won’t want wages in cash as they can’t declare it so can’t use it to get a mortgage, or rent a house.

Many suppliers are still happy to accept cash, especially "dirty" trades such as scrap merchants, car bodyshops, scaffolders, roofers, skip hire, car scrap yards, etc as they may wish to have undeclared cash sales too to reduce their tax bills!

Likewise, with staff, there'll be plenty who it suits to be "off the books" such as those claiming benefits, etc who don't want to lose their benefits.

None of that would have been in the thought process before covid.

@Badbadbunny

My point is that it absolutely should have been. I'm currently looking for a nanny/housekeeper through recommendation, and the number of people who have suggested paying cash has shocked me. I work in finance, and would lose my practicing license if any whiff of tax evasion came near, so I'm keen to sign up someone under PAYE/NI.

The government could change the rules so trades worked through chartered registered bodies in the same way solicitors/accountants/doctors/dentists do. Having regulated trades would reduce cowboy builders, and (hopefully) help customers access more reasonable prices.

Wannabeamummysobad Who does your decorating of a 2 bed flat for £5K?? I'm in SW London, also 2 bed flat and it cost be c.£8K in 2019!

Yup, thanks Brexit. We need to get re-quoted for the loft now and while I think we could still afford the basic work I don't know if we'll be left with enough to decorate and finish it!

@user1497207191

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

The tradesman who gets paid in cash by customers in turn pays their suppliers and non registered "employees" in cash, so their workers evade tax and NIC too! The whole point in taking cash is NOT to bank it - i.e. avoid the "proof" or audit trail, hence why they want it to pay on to others who are likewise tax evaders.

You are talking rubbish we are not in the 70’s anymore in case you hadn’t noticed.

£125K per year.
Disgraceful no simple tradesman should be allowed that.
That amount should be reserved for a better class of person.

[quote Badbadbunny]@EvilPea

You can’t pay many suppliers in cash anymore. Staff won’t want wages in cash as they can’t declare it so can’t use it to get a mortgage, or rent a house.

Many suppliers are still happy to accept cash, especially "dirty" trades such as scrap merchants, car bodyshops, scaffolders, roofers, skip hire, car scrap yards, etc as they may wish to have undeclared cash sales too to reduce their tax bills!

Likewise, with staff, there'll be plenty who it suits to be "off the books" such as those claiming benefits, etc who don't want to lose their benefits.[/quote]
Scrapyards aren’t allowed to deal in cash anymore. They have to pay in transfers.

Honestly, I deal in these trades. Dh is a tradesman, all his friends are. Cash is gone. The last 5 years. It’s gone. The lack of mortgage and renting with it, house prices being what they are you have to be able to prove your income.

The only place I know that’s cash is the local builders merchant where you give the security £50.

@user1497207191

Theres barely any benefit to getting cash now so it’s honestly not happening on any scale with tradesman.

The tradesman who gets paid in cash by customers in turn pays their suppliers and non registered "employees" in cash, so their workers evade tax and NIC too! The whole point in taking cash is NOT to bank it - i.e. avoid the "proof" or audit trail, hence why they want it to pay on to others who are likewise tax evaders.

Bear in mind that if you pay in cash and they don't declare it and pay VAT when they should have done, HMRC can come on to you for the VAT if they find out. And if you knew they were doing it, you could be in bigger trouble. I'm self-employed. I take cash if a customer wants to pay that way (e.g. some do as some commissions are secret presents for people who have joint accounts with the recipient) but declare every penny of it. I get croos when occasionally peopel say 'I'll pay in cash because 'you people' like it'. I don't like it t all, it's a nuisance, I prefer cheques or BACS, and I also don't care for the implication that I'm a thief. Tax evasion is theft- from all of us. (I'm under the VAT threshold, by the way, so that doesn't come into it, only tax.)