Half of construction workers self employed says HMRC

12th September 2018

The latest figures from HMRC reveal that a huge 49% of construction industry workers in the UK are self-employed.

Unite made a Freedom of Information request to the HMRC, who then stated that 1.12 million workers in the construction industry were paid by the Construction Industry Scheme (CIS) in 2017/18 - this marks a 4% increase on 2016/17 figures.

The construction industry has a stand-alone tax scheme called the CIS - and any workers under this scheme are legally classed as self-employed, despite being taxed at source. This has lead to opposition of the scheme, with some trade unions slandering the workers under the scheme as “bogusly self-employed”. 

It was only a few years ago that the government implemented procedures which were designed to hinder the rife of bogus self-employment within the construction industry. Construction workers who were operating through engages (employment agencies and payroll companies) were then unable to be self-employed.

Since this happened, in 2014, there has consequently been an 18% increase in workers operating through CIS, suggesting the government's’ intentions to reduce self-employment failed. With an estimated 2.29 million workers working in the UK construction industry, 49% were paid through CIS in the past year.

Campaigners argue that employers avoid paying national insurance contributions for their staff due to the CIS scheme - which amounts to 13.8% of a worker’s eligible earnings. However, although the self-employed pay lower levels of NI, they don’t get holiday pay and have fewer employment rights to protect them.

Gail Cartmail, Unite assistant general secretary, said: “These latest figures are a damming indictment of the failure of the government to deal with rampant bogus self-employment in construction. Bogus self-employment is costing the exchequer millions in lost revenues and amounts to a huge hidden subsidy to construction employers."

“The government has clearly lost control of tackling bogus self-employment in construction, resulting in the routine exploitation of workers. The entire system needs to be radically reformed so that workers are either genuinely self-employed or paid via a standard PAYE format.”

Written by Ian Johnson