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Treasury focus on ‘false self-employed’ in construction

Posted 30-09-2009 by Redego

Tags: construction, Contractor, PAYE, Umbrella Company

Treasury focus on ‘false self-employed’ in construction

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.

They published a new consultation (July 2009) that has the look and feel of the finished article, so its more than likely to become legislation before the end of 2010.

Reading between the lines, HMRC see this as the final attempt to align the construction industry with other sectors and get 300,000 ‘false’ self-employed subbies on to PAYE. Genuine self-employed workers will be able to continue trading by passing a simple 3 criteria test. To qualify, sub-contractors would have to either:

provide their own plant & equipment (normal tools of the trade do not count!)

provide all the materials for a contract OR

provide other workers

So, how will the construction industry respond? To be fair to the industry, they have always had to balance between being ‘compliant’ with competing with other contractors who pay workers on a ’self-employed’ basis. To make matters worse, the test for employment status has always been complex, based on case law and constantly changing, so they could genuinely say they didn’t know whether a worker was self-employed or not.

Now there is a workable status test, and the Treasury’s intention has been clearly stated, most contractors will probably decide that the risk of non-compliance is too great and make arrangements to pay their workers through PAYE. They can do this through their own payroll or outsource to a compliant PAYE umbrella company, which will give workers the opportunity to claim legitimate expenses

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.

Minimum wage up to £5.80 an hour

Posted 29-09-2009 by Redego

Tags: minimum wage, PAYE

The UK minimum wage will rise by 7p to £5.80 an hour from October, the government has announced.

The rate for 18 to 21-year-olds will increase by 6p to £4.83 and for 16 and 17-year-olds will go up by 4p to £3.57.

The change will come a year after the statutory hourly rate was increased by 21p an hour.

Business leaders had recently called for the minimum wage to be left at the current levels in 2009 amid the economic downturn.

The government said that nearly one million people would benefit from October’s increase.

It also announced that, from October 2010, the adult statutory minimum rate would apply to 21-year-olds. At present their minimum wage is set – together with workers aged 18, 19 and 20 – at a lower rate.

Review

“The Low Pay Commission (LPC) has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate,” said Business Secretary Lord Mandelson.

“The government agrees with this assessment and has accepted the recommendations for these new rates to take effect in October.”

The chairman of the LPC, George Bain, said: “These are very challenging times for the UK and unprecedented economic circumstances for the minimum wage.

“We believe that the Low Pay Commission’s recommendations are appropriate for this economic climate. They reflect the need to protect low-paid workers’ jobs as well as their earnings.”

David Frost, director general of the BCC, said: “We pressed for a freeze to the minimum wage because of the severity of the downturn and the daily loss of jobs.

“We are pleased that the increase is only a modest one, and it shows that the Low Pay Commission and the government have largely understood the seriousness of the situation. However, a freeze would have been more help to business.”

‘Sensible’ approach

Dave Prentis, general secretary of the union Unison, said he was pleased the government had ruled out business leaders’ suggestions that the minimum wage be frozen.

“We think it should be increased by more than 7p an hour because it is hardly going to help low-paid workers pay the bills,” he added.

John Cridland, deputy director general of the CBI, said: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment.

“The inflation-busting rise some unions had called for would have hit firms hard and put many lower paid workers on the dole.

“Over the past decade, the minimum wage has risen faster than average earnings and inflation, and a sensible, cautious approach now will help ensure this landmark piece of legislation continues to improve the lives of low paid workers for many years to come.”

The news of the increase in the minimum wage comes shortly after the government said that, from October, employers would be banned from using tips and service charges to “top up” staff pay to meet the minimum wage.

However, tips not left in cash can still be used to pay restaurant’s other expenses and may not mean any more money for staff.

The government also said that it would draw up plans based on the LPC recommendation that employers who show “wilful disregard for minimum wage laws” should be named and shamed.

The UK minimum wage will rise by 7p to £5.80 an hour from 1st October, the government has announced.

The rate for 18 to 21-year-olds will increase by 6p to £4.83 and for 16 and 17-year-olds will go up by 4p to £3.57.

National Freelancers Day

Posted 29-09-2009 by Redego

Tags: Contractor, Freelancer, Freelancing

PCG, which represents the UK’s freelancers has declared Monday 23rd November 2009 National Freelancers Day in drive to encourage everyone to acknowledge all freelancers, consultantsand contractors and the contribution they make to the UK economy. The Day has been launched as part of PCG’s tenth anniversary celebrations.

John Brazier, managing director of PCG, commented: “We have seen a significant increase in the number of people opting to go freelance over the last ten years and today there are 1.4 million freelancers in the UK. PCG wanted to establish a special day for them and on National Freelancers Day we can recognise freelancing and celebrate the talents, achievements and worth of freelancers up and down the country.”

PCG’s vision is for freelancers to enjoy the optimum environment in which to operate and thrive. As such, National Freelancers Day will highlight five key themes:

Fair and equitable taxation

The right to work freelance

Government to make it easier for clients to engage freelancers

Recognition that freelancers are in business on their own account

Freelancing to be respected as a valid career choice and essential ingredient in the success of UK Plc.

National Freelancers Day will see a number of events taking place UK-wide for freelancers across all sectors and PCG will be calling on its members and well-known freelance celebrities to talk about what it means to be a freelancer.

PCG, which represents the UK’s freelancers has declared Monday 23rd November 2009 National Freelancers Day in drive to encourage everyone to acknowledge all freelancers, consultantsand contractors and the contribution they make to the UK economy. The Day has been launched as part of PCG’s tenth anniversary celebrations.

Judge demands Government scrap compulsory retirement age

Posted 29-09-2009 by Redego

Tags: retirement

A judge has called time on the Government’s statutory retirement age of 65, ruling that in the current economic climate it was unlikely to be lawful.

In a test challenge, Mr Justice Blake ruled that he did not see how 65 could stay as the default retirement age when the Government reviewed it next year — although it would still be lawful for employers to sack workers when they reached that age until the law was changed.

In a huge boost to campaigners who want the age scrapped, he said: “I cannot presently see how 65 could remain as a DRA \ after the \ review.”

His comments came in a ruling on a challenge to the retirement age brought by the charities Age Concern and Help the Aged, together with the Equality and Human Rights Commission.

A judge has called time on the Government’s statutory retirement age of 65, ruling that in the current economic climate it was unlikely to be lawful.

UK recession is ‘over’ as confidence grows

Posted 25-08-2009 by Redego

Tags: recession, VAT

The UK recession has ended, according to a new study that found the biggest rise in business confidence in two years.

The Institute of Chartered Accountants in England and Wales (ICAEW) found a record rise in confidence among professionals.

Its gauge of business sentiment rose to 4.6 per cent for the third quarter, up from a record low of -45.3 in the first three months of the year, marking the biggest jump in the index since it began in 2003.

This is the first time the index, which represents the opinions of 1,000 accountants working in businesses across the country, has been in positive territory since 2007 and the first move by the study.

The optimism was further underpinned by expected rises over the next 12 months in 13 out of the 14 financial performance indicators the research studies.

Michael Izza, chief executive of the ICAEW, said the study “suggests the UK recession is at an end”.

Policies such as quantitative easing and interest rate cuts by the Bank of England and the drop in VAT had helped businesses to weather the financial storm, he said.

VAT was temporarily reduced from 17.5 per cent to 15 per cent in December in a bid to boost consumer spending in the recession.

Businesses had also helped themselves, he said, by adopting the right measures to ease the slump such as cutting staff.

Mr Izza warned against “underestimating” the challenges ahead, adding that “the recovery is very fragile and I would urge policy makers not to take any actions that could derail it.”

The study found that 41 per cent of senior business professionals were more confident about the economic prospects for their businesses; 6 per cent were “much more” confident.

The IT sector was the most confident, followed by banking, finance and insurance and property.

Sentiment was most upbeat in Wales, followed by Scotland and northern England. London and the South East remained the most nervous.

The UK recession has ended, according to a new study that found the biggest rise in business confidence in two years.

The Institute of Chartered Accountants in England and Wales (ICAEW) found a record rise in confidence among professionals.

How virtual lawyers are weathering the recession

Posted 04-08-2009 by Redego

Tags: Freelancer, Freelancing, recession

Some do it for childcare. Others do it to pursue non-legal interests such as oil painting. One even combines it with presenting the weather on Sky News. But all represent a growing trend of solicitors embracing the freelance life.

Pressure mounts on the construction industry

Posted 31-07-2009 by Redego

Tags: construction, Contractor, MSC legislation, PAYE, Umbrella Company, VAT

The Treasury have now produced their consultative document promised in the last budget on what they like to call ‘False Self Employment’ in the Construction Industry.

It is clearly an attempt to extract more money out of the industry. They have estimated that of the 860,000 self employed subcontractors in the UK 300,000 have been wrongly described as self employed and if these workers were re-classified as employees the Treasury would benefit to the sum of £350 million per year.

Temp worker opportunities in Eastern Europe

Posted 31-07-2009 by Redego

Tags: recession, Umbrella Company

Eastern Europe shows strong potential for temporary workers, according to new research from Eurociett and Interconnection Consulting.

Focusing on Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia, the report shows that most significant opportunities lie in countries where the sector is best established and that have a sound regulatory framework in place – particularly Poland, Hungary, Slovenia and the Czech Republic.

How does the pension cap affect Contractors?

Posted 31-07-2009 by Redego

Tags: Contractor, Umbrella Company

Since ‘A-day’ in 2006, the pension’s simplification rules have allowed Contractors to dramatically reduce their tax bills by contributing a large proportion of their income into a pension scheme. In fact, the only barrier to cap your contributions was the lifetime allowance of £1.75 million and the annual allowance of £245,000 (for 2009/10) and aside from this, it was left to the individual to decide how much to contribute from your annual income.


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