What is the difference between working in the Construction Industry Scheme and being Self Employed (for tax purposes)?
The self employed receive their income ‘gross’ from any deductions and have the sole obligation to pay tax and National Insurance (Class 2 & Class 4) to HMRC. Their tax liability has to be paid to HMRC as payments on account, twice a year, in July and January (See Key dates) to settle the full tax bill due for the tax year. See more FAQ’s on Self Employment. Most sub contractors will receive their wages net of tax already deducted by their contractors (at either 20% or 30%). These deductions are up-front payments to HMRC for tax due at the end of the tax year. Normally their tax deductions are made without taking the tax free allowance into account, and they should therefore generally be due a tax refund at the end of the tax year. (Some sub contractors receive their wages ‘gross’ for which they will then have the same responsibilities as someone normally self employed.
