A Practical Guide to Subcontracting

R. Jones

• Publisher: Routledge
• Year: 2003
• ISBN:
  9781135385507
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

Concise review of the rules and regulations for employing labour directly, labour-only subcontractors or supply and fix-sub-contractors. Also offers practical advice on the tax deduction scheme and how to avoid falling foul of the Inland Revenue.

Chapter 1
EMPLOYMENT RULES
AND REGULATIONS

All builders, even most one-man builders at times, employ direct Labour, “Labour-only sub-contractors” and/or “Supply-and-fix sub-contractors”, and there are rules and regulations to be followed by a builder for each of these categories which could result in severe penalties if ignored.

The rules and regulations regarding sub-contractors are provided in Chapter 2.

The Direct Labour rules and regulations include:

• PAYE
• National Insurance
• The Working Rule Agreement for the building industry
• Apprenticeship
• Statutory Sick Pay
• Working Rule Sick Pay
• Redundancy
• Dismissal notices
• The construction industry holiday pay scheme.

PAYE

The following are the principal books and forms issued free of charge by local Inland Revenue Offices:

• P.8 (1986) pages 1 to 8 on plastic sheets (there are two pages No. 2). These cards set out how the system operates
• P.7, “The employer’s guide to PAYE”
• Taxable Pay Tables B to D
• Free Pay Table (Table A)
• P.11 the “Deduction Working Sheet” (see Chapter 4)
• P.45, the form which should be brought with him by a new employee, or given to an employee by the builder when he leaves
• P.46, the form to be sent to the Inland Revenue in respect of an employee who has not previously been taxed (e.g. school leaver) or who is unable to produce a P.45
• P.11D, the form to be completed at the end of March of each year by all directors (with more than a 5% shareholding) and members of staff earnings more than £8,500 per annum, requiring particulars of benefits they have received, such as motor cars, petrol, accommodation, etc.

An example of PAYE calculations is given in Chapter 4 and in Figs 1 to 9.

National Insurance: Class A

There are various classes of National Insurance. Class A is the standard:

Employees’ contributions

Contract-out Employment

Employers’ contributions

Non-contracted Out Employment

Liability for National Insurance contributions commences at the age of 16 for both employer and employee. Employees contributions cease at the age of 65 for men and 60 for women, but the employer’s contributions continue.

Class 2

Class 2 contributions are payable by the self-employed at the rate of £4.05 per week, if their earnings, exceed £2,250 Class 2 also requires the self-employed to pay Class 4 contributions and entitles the payer to pension, sickness and all other benefits except—unemployment and industrial injuries.

Class 3

Class 3 contributions at £3.95 per week are a voluntary augmentation by Class 2 contributors who wish to embrace the benefits of unemployment and industrial injuries.

Class 4

Class 4 contributions are payable by the self-employed on profits chargeable to income tax under Schedule D and at the rate of 6.3% of those profits between £4,750 and £15,860 (Maximum £699.93).

National Insurance Guides and Annual Returns

The “Employers Guide to National Insurance Contributions”, NP.15, is obtainable from local offices of the Department of Social Security.

A return of National Insurance conbributions is required by the Inland Revenue after the end of March of each year.

Monthly Payments to be made by the builder

Tax collectors provide the builder with books of forms P.30CB(Z) which the builder must complete and send with a cheque each month; which should show separately how much relates to PAYE and how much to National Insurance conbributions (Employer’s plus employees); after deducting from the total of the above any Statutory Sick Payments made.

The Working Rule Agreement

The Working Rule Agreement (about 190 pages) is published about July of each year by the National Joint Council for the Building Industry. It can be obtained from the Building Employers Confederation, Publications Department, Federation House, 2,309/11 Coventry Road, Sheldon, Birmingham B26 3PL82. It contains details of the entitlements of both the employee and employer.

A resume of the Working Rules and how they operate, is contained in the Building Trades Journal publication “A Practical Guide to Estimating Daywork Rates 1988/89” (see booklist at back of book for details).

“Statutory Sick Pay” and “Working Rule Sick Pay”

“Statutory Sick Pay” must be distinguished from “Working Rule Sick Pay”. Statutory Sick Pay is payable for up to 28 weeks by employers on behalf of the Government and is recoverable from Government as a deduction from the amount due to the Government for PAYE and National Insurance contributions.

Working Rule Sick Pay is additional to Statutory Sick Pay and payable by and borne as a cost by the builder. The maximum is 8 weeks.

Both “Statutory Sick Pay” and “Working Rule Sick Pay” are payable after three “Waiting days” i.e. normal working days (Qualifying days in the construction industry are Mondays to Fridays inclu...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Introduction
• Chapter 1: Employment Rules And Regulations
• Chapter 2: Sub-contractors Tax Deduction Scheme
• Chapter 3: Sub-contractors Procedures
• Chapter 4: Payroll Preparation
• Chapter 5: Cost Direct Labour
• Building and Construction Books
• Building and Construction Books