Building contractors face tax crackdown

The UK government had proposed to reform the income tax for self-employed construction workers. With this new measure, they would have to pay taxes on a ‘pay-as-you earn basis’. The result is that the construction companies will have more administrative work. The construction workers will have to pay almost 13% extra taxes. But they also would not get any benefits packages that are connected with their job, such as pensions,..

According to tax experts this rule will affect a lot of contractors, because the industry in the UK consists of a lot of self-employed labour. Also the hire-agencies of contractors will be affected.

The government has taken many rules in the past years, but none of them seemed to work effectively. By introducing the new legislation, they hope to receive more income from this sector, that was down because of the crisis.Another reason for the new law, is to ensure that the self-employed construction workers pay all the taxes they are due.

In our group we have separate opinions about this subject. Some of us think it is good for the government to receive extra capital to invest in the economy to recover from the crisis. But we also think that these taxes will lower the purchase power of the employees. This is negative for the UK economy. This industry is now the only victim in this crisis. We think all industries should participate for an equal part in the extra taxes. Another advantage of these taxes is that they can contribute in the battle against moonlighting.

Source: http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6865978.ece

October 8, 2009
Tim De Backer, Bart Lammens, Gerty Rigaux, Wouter Van Caenegem and Jens Van Nieuwenhove