Tax Rights for Construction Workers UK

Working in the Construction Industry

 

You must have a registration or tax certificate to work as a subcontractor in the construction Industry. Without one of these you will not be paid.

To apply for a registration card or tax certificate you need to visit your nearest HM Revenue and Customs Enquiry Centre taking with you at least two forms of identification e.g. passport and a recent utility bill

 

What counts as taxable income?

Taxable income includes:

  • earnings from employment
  • earnings from self-employment
  • most pensions income (State, company and personal pensions)
  • interest on most savings
  • income from shares (dividends)
  • rental income
  • income paid to you from a trust

 

Non-taxable income

There are certain sorts of income that you never pay tax on. These include certain benefits, income from tax exempt accounts, Working Tax Credit (WTC) and premium bond wins. These income sources are ignored altogether when working out how much Income Tax you may need to pay.

 

How much Income Tax you pay

After your allowable expenses and any tax-free allowances have been taken into account, the amount of tax you pay is calculated using different tax rates and a series of tax bands.

 

 

Income Tax rates 2008-09 by tax band and type of income

Income Tax band

Income Tax rate on non savings income

Income Tax rate on savings

Income Tax rate on dividends

£1 to £2,320
Starting rate:

Not available

10%

n/a - see basic rate band

£1 to £36,000
Basic rate:

20%

20%

10%

£36,001 and above
Higher rate:

40%

40%

32.5%

 

Because the rate of Income Tax you pay on savings is worked out after any non-savings income has been taken into account, if your non-savings income is less than the starting rate for savings limit (£2,320) - or if savings and investments are your only source of income - your savings income will be taxed at the 10 per cent starting rate up to the limit. But if you already have non-savings income which takes you above the starting rate, all of your savings will be taxed at the 20 per cent basic rate.

 

Remember, the tax band applies to your income after your tax allowances and any reliefs have been taken into account - you're not taxed on all of your income.

'Non savings income' includes income from employment or self-employment, most pension income and rental income.

'Dividends' means income from shares in UK companies.

Savings and dividend income is added to your other taxable income and taxed last. This means you pay tax on these sorts of income based on your highest Income Tax band.

How you pay Income Tax

Income Tax is collected in different ways depending on the type of income and whether you're employed, self-employed or not working. The different ways Income Tax is collected include:

  • PAYE (Pay As You Earn)
  • Self Assessment (SA)
  • tax deducted 'at source' whereby tax is deducted from bank/building society interest before the interest is paid to you
  • in some cases, one-off payments

If you're an employee, your employer will deduct tax through PAYE. If you're self-employed, you'll be responsible for filling in a Self Assessment tax return and paying your own tax.

Paying the right amount of Income Tax

It's important to check that you're paying the right amount of tax. You can do this by checking your:

  • total taxable income
  • tax-free allowances and reliefs
  • current tax code

If you're paying too much tax you can claim this money back. If you think you're paying too little you'll need to contact us to change your tax code.

National Insurance

As well as paying Income Tax on your income, you'll also have to pay National Insurance contributions (NICs). NICs build up your entitlement to certain social security benefits, including the State Pension. The amount of NICs that you pay depends on how much you earn and whether you're employed or self-employed. You stop paying NICs when you reach retirement age.

 

Construction workers - What you need to do when you arrive: Your NI Number

What is a National Insurance number?

Your National Insurance number is a unique personal number allocated to you that is used to identify you to HM Revenue & Customs and the Department of Work and Pensions. It ensures the Government correctly records any contributions you are entitled to, or which are paid into your NI account. Your National Insurance contributions go towards the UK social security and state pension system. Everyone who works in any capacity in the UK will need to register for an NI number.

A NI number should only be given to one person and must only be used by that person. There are circumstances when, by law, you must apply for a NI number.

 

How do I get my National Insurance number?

To apply for an NI number you will need to make an appointment at your local Jobcentre when you arrive in the UK . At the interview you will need to provide proof of your identity and account for all your past years, work and travel, and how and when you arrived in the UK .

When and where should I apply for a National Insurance number?

You should apply for a NI number if:

  • you will be making a claim for benefit, or
  • your partner is claiming benefit for you.

This should be done through your local Jobcentre Plus office. You can find your local office on the Jobcentre Plus website.

You should also apply for a NI number if:

  • you have started or are about to start work
  • you are self-employed, or
  • you want to pay voluntary NI contributions and would benefit from paying them.

 

What types of evidence and information can I bring?

In order to apply for the number you will need documentation to do with employment (such as a contract or letter from your employer), so it is easier to apply once you have secured employment. If you have not yet secured employment, you can still apply, however certain documents will be required (such as job rejection letters, letters from your recruitment agent etc).

Here are some examples of the types of evidence and information they require need. They cannot accept photocopies.

General documents:

  • Passport
  • National Identity card
  • Birth certificate
  • Marriage or civil partnership certificate.
  • Full driving licence
  • Home Office documents
  • 2 or more passports if you are of dual- or multi-nationality
  • Student-loan documents
  • Student identity card
  • Letter from your college, including course details
  • Mortgage or rental agreement
  • Residence or naturalisation documents
  • Adoption certificate

Employment documents:

  • Payslips
  • A work permit
  • A letter from your employer
  • Your contract of employment
  • Details of any employment agencies you are registered with.
  • Evidence that you are actively looking for work
  • Certificate of incorporation
  • Memorandum of association
  • Articles of association
  • Services contract

Documents if you're self-employed:

  • Invoices
  • Letters from your accountant
  • Letters from your clients
  • A form or letter from HMRC about your self employment, for example a bill for your Class 2 National Insurance contributions.
  • Stock transfer form

If you have recently arrived in Britain after living outside Europe , you must bring any travel documents you have. These are documents that give information about your travel between countries. They include things like your passport, National Identity card or NASS 35 form (issued to people seeking asylum in the UK ).

 

 

 

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