It seems there are many proposed changes to the taxes we all pay in the near future and the most recent of these proposals is that temporary workers and employments agencies are going to end up paying more tax than the rest of the population.
These employees are being targeted and required to pay more pay as you earn tax as well as an increased amount of national insurance contributions. Approximately 5% of the workforce are temporary workers and are a popular choice for industries with fluctuating staffing needs such as the agricultural sector.
The grey area in the past has been between the employees that are employed on a temporary basis by the businesses themselves and the employees that are employed by an agency and seconded out to different companies depending on contract length.
As of April 2014 the government is having a strict crackdown on those employees that are sub-contractors and supplied by an agency. The current situation is that PAYE and NI for temporary workers doesn’t apply if the worker ‘is not obliged to provide personal services’. They accept that a self-employed worker finding jobs through an agency is still strictly self-employed so should be taxed as such, but this is what will end in the coming months.
In future the worker will have tax and national insurance contributions deducted at source, at 12%, and in addition the agency will become liable for employer national insurance contributions at 13.8%. This will have extensive repercussions on these individuals and moreover on the 5% of the population that are indeed temporary workers. Considering the state of the economy it is an either a brave or needless change, the results of which will be clear in a matter of months.
The government estimated that 200,000 construction workers and 50,000 other people will now be subject to PAYE, therefore raising the tax and NI contributions by around £520 million next year. A great money making scheme you might wonder. With the construction industry currently being a huge reason for the countries economy improving this doesn’t seem like the best way to reward it.
If you already suspect you may have some PAYE or CIS tax to reclaim then this is the perfect time to do it. You can use Express Tax Claims web site to check if you are subject to PAYE or CIS. They are offering really fast and reliable service. If you do get a pay out you can store it so that you are not hit so hard when the increases occur in April.