Any questions: I work in the construction industry: which coronavirus scheme do I qualify for?
We regularly receive queries via our website. We do not give advice, but we try to signpost sources of further information and support. Some of the replies might be useful to others, so occasionally we will post them anonymously as ‘question and answer’ news items. We have received a question recently on whether a construction industry worker, paid under the CIS scheme, is employed or self-employed for the purposes of qualifying for the coronavirus income support schemes.
⚠️ Please note: this is posted as a ‘news’ item, which means the information and links are not reviewed and updated. You should not rely on it without checking the full facts of your case with HMRC or a tax adviser.
Question
My son works under the Construction Industry scheme (CIS) and has tax deducted from his pay. Can he claim help from the government under the Job Retention Scheme? He has been working for the same person for a number of years but they are saying he is self-employed.
Answer
If your son works in the construction industry and he is being dealt with under the CIS, then he is being treated as self-employed by his engager.
However, we understand that this can be confusing, as under CIS you are given ‘payslips’ and have tax deducted at source (unless you are registered on the Gross Payment Scheme). This is different from most other self-employed individuals, who normally receive their payments gross (without any amounts deducted).
If you work under the CIS, you need to file a Self Assessment tax return, like other self-employed people but HMRC will take off any tax that has already been deducted through the CIS from your Self Assessment bill. This can often result in tax repayments being due.
Provided your son has being doing his tax returns every year, then he should be able to qualify for the Self Employed Income Support Scheme if his work/income have been affected by the coronavirus.
If your son has not filed a tax return for the 2018/19 tax year yet, then we suggest that this is done as soon as possible and in any event, before the 23 April. (HMRC will accept late filed 2018/19 tax returns as this is the basis on which people are selected for an invitation to apply for the scheme).
If he has tax returns outstanding for earlier years which have not yet been submitted, we strongly recommend that your son bring his tax affairs up to date (not only is it the right thing to do but it could also impact on what support he is entitled to from the Self Employed Income Support Scheme).
(It is not clear if HMRC will accept late filed prior year tax returns as counting towards the Self Employed Income Support scheme – we are confirming this with them. We are also waiting for confirmation from HMRC on whether Self Assessment tax returns for 2018/19 which are filed by 23 April will be subject to late filing penalties.)
TAX GUIDANCE: The @litrgnews team has produced a short video to cover the main points in our recent Any Questions article:
▶️ I work in the construction industry: which #coronavirus scheme do I qualify for?
Watch the video below and find out more here: https://t.co/GnrwCS0jbs pic.twitter.com/PNqNV0HG0q— LITRG (@litrgnews) April 8, 2020
Click/tap video twice to watch
If your son needs assistance with filing any outstanding tax returns, he may want to seek assistance from a professional tax adviser or accountant (or from Tax Aid the tax charity if he cannot afford professional assistance). You can read more about finding last-minute tax return help in our news article How to find last minute tax return help.
In reality, it is possible that your son is being treated as self-employed by the person he works for (his engager) incorrectly, as you should only get paid under CIS, if you are genuinely self-employed.
While most engagers would no doubt prefer to hire workers on a self-employed basis (as for the engager this means less cost/responsibilities/paperwork etc.), self-employment is a question of fact, not choice. You can read more about deciding employment status on our website.
In situations where a person works exclusively for one business and does not have the risks of running their own business, then they are likely to be an employee, rather than self-employed. This is important as it means that tax (and National Insurance contributions) should be withheld under the Pay as You Earn system rather than CIS. It is also important because, as far as employment rights go, construction industry workers who are incorrectly classified as self-employed have very little protection under employment law.
Being treated as self-employed incorrectly should not impact on the current situation and the availability of the Self Employed Income Support Scheme (as this is not currently HMRC's focus), but in the longer term, your son might want to consider asking the business that he works for about his employment status or contact HMRC.
