Labour reveal £400m builder tax loophole

 

Construction workers who claim to be self-employed when they are not are costing taxpayers £400m a year in reduced tax and national insurance payments, Labour will claim tomorrow.

A future Labour Government would close a loophole in the tax system which gives building workers an incentive to be treated as self-employed sub-contractors. Labour would also clamp down on tax avoidance by professionals.  Last year, it emerged that about 2,400 civil servants enjoyed “off payroll” arrangements and the BBC said it would review the freelance contracts of more than 800 on-air staff who are paid through their own companies.

Labour is promising specific action on the construction industry because it accuses the Coalition Government of failing to act. It follows a review commissioned by Ed Balls, the shadow Chancellor, which consulted employers, workers and tax and employment experts.

Under the industry’s scheme, workers can be engaged by a company, often via a payroll firm acting as an intermediary, to turn up on a building site, work as part of a team under someone else’s direction, and yet be treated as a self-employed subcontractor with no security or employment rights and without paying the full level of national insurance contributions.

An estimated 300,000 “bogus self-employed” construction workers would be deemed by a Labour Government to be ordinary  employees. Labour said it would work with the industry to ensure the genuinely self-employed were not hit and the sector was not damaged.

Rachel Reeves, the shadow Chief Treasury Secretary, said: “In tough times like these when there is less money around, we cannot afford to leave loopholes in the tax system that allow vital revenue to be lost. It is also unfair on the majority who do the right thing and play by the rules if some are able to avoid paying their fair share of tax. After three wasted years of flatlining which have seen living standards falling and deficit reduction stalling, this is even more important.”

She added: “Removing a perverse financial incentive for workers whom most would regard as being in an employment relationship to be classed as ‘self-employed’ would be good for the construction sector and its workforce too. As things now stand, the majority of employers in the sector who do the right thing and pay the right level of tax are vulnerable to being undercut by those who do not. This is not fair and it’s not good for the long term strength and sustainability of the industry.”

Start your day with The Independent, sign up for daily news emails
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: PMLD Teacher

Negotiable: Tradewind Recruitment: PMLD Teacher A specialist primary school i...

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links