Written for general builders, groundworkers, carpenters and joiners, roofers, plasterers, bricklayers and kitchen and bathroom fitters in the UK, from one-van firms to small main contractors.
The short version
- Judge each regular subbie on how they work.Check control, personal service, mutual obligation, who provides the equipment and who carries the financial risk. CIS registration settles nothing.
- Fix every arrangement that looks like a job.Change how the work is really done, or move them onto the payroll. Do all similar arrangements together.
- Take advice before you answer HMRC.Assessments can reach back years, with interest, penalties and holiday pay claims on top.
A small building firm usually grows with regular subbies. Over time the same person ends up on every job, on your hours, with your tools, and nobody stops to ask whether it is still self-employment. HMRC does ask, and when it does, the bill can reach back years.
What decides status
Status is decided by the reality of the arrangement, not the label or the CIS registration. Control, personal service, mutual obligation, who provides the equipment and who carries the financial risk all matter. HMRC's CEST tool answers the tax question only on accurate inputs.
Ready Mixed Concrete v Minister of Pensions [1968] 2 QB 497; Autoclenz v Belcher [2011] UKSC 41
How far back HMRC can go
PAYE assessments can normally go back 4 years, 6 years where the loss was brought about carelessly, and 20 years where it was brought about deliberately. National Insurance has its own separate rules. A worker or employee may also claim holiday pay. As of Oct 2026.
Taxes Management Act 1970 ss.34 and 36
| Year 1: £180 a day x 5 days x 52 weeks | £46,800 |
| Year 2 | £46,800 |
| Year 3 | £46,800 |
| Pay that PAYE and National Insurance may be charged on | £140,400 |
The subbie worked only for you, full time, on your hours and with your tools. On top of the PAYE and National Insurance, expect interest and penalties, plus their own claim for holiday pay. Take advice before answering HMRC.
The label settles nothing. A subbie on your hours, with your tools and no other clients, is probably an employee for tax however they are registered.
Paying subbies and agencies safely
Paying a subbie's money to someone else
Pay only the verified business's own account. From 6 April 2026, where the statutory knowledge and deliberate-failure test is met, HMRC can determine an amount equal to 20% of a connected construction payment, cancel gross payment status, and charge a penalty of up to 30% of the amount determined, with a 5-year bar on reapplying. As of Oct 2026.
Finance Act 2004 ss.62A and 72A; Finance Act 2026 ss.220 and 222
Umbrella companies
For payments from 6 April 2026, the agency that contracts with the end client, or the end client itself where there is no agency, is jointly and severally liable for PAYE and National Insurance an umbrella company fails to pay, with no due-diligence defence. As of Sep 2026.
Finance Act 2026
- CIS verification does not establish someone's immigration status or right to work.
- Holiday is 5.6 weeks a year for workers, regular overtime counts in holiday pay, and travel between sites in the working day is working time.
- The CITB levy counts subbies too: employers mainly engaged in construction in Great Britain pay 0.35% of PAYE payroll plus 1.25% of payments to subbies paid net under CIS, with no levy below a £150,000 wage bill (PAYE plus net CIS) and 50% off up to £499,999. Gross-status subbies are outside it. As of Sep 2026.
Taking people on
The usual first hire is a labourer or improver, then a working supervisor so jobs run without you. Before any employee starts, complete the prescribed right to work check: the civil penalty is up to £45,000 per illegal worker for a first breach and £60,000 for a repeat breach. Put a drug and alcohol policy, with consent to testing, in the contract, check the licence and insurance of anyone driving the van, and provide PPE free of charge. As of Oct 2026.
Apprentices can cost less than owners expect. In England, for apprenticeships starting from 1 August 2026, an employer that does not pay the Apprenticeship Levy pays no training contribution, up to the funding band maximum, for an apprentice aged 16 to 24 at the start, and 5% for one aged 25 or over. For training starting from 1 October 2026 it may also get up to £2,000 for a 16 to 24 year old who has worked for it for no more than 90 days before training starts, paid in two instalments and subject to continued employment. There is no employer National Insurance on apprentices under 25, up to the upper earnings limit. As of Oct 2026.
If HMRC opens an enquiry into one subbie, take advice before you answer, and restructure every similar arrangement at the same time, not only the one being asked about.
Asked in Greymill
Your hours, your tools and no other clients: that is the pattern that points to employment.
What is at stake:
A year: £180 x 5 days x 52 weeks = £46,800
Three years: £140,400 that PAYE and National Insurance may be charged on
Plus interest, penalties and his own claim for holiday pay.
How far back: PAYE assessments can normally go back 4 years, 6 if careless and 20 if deliberate (As of Oct 2026).
If HMRC asks about Dave, take advice before you answer, and restructure every similar arrangement at the same time, not just his.
Before the new lad starts, shall I check both setups against the five status factors, from control to financial risk?
Ask it about your own business
Paste this into Greymill with your own figures, and Staff & HR works it through for your business.
I run a construction or building business in the UK. I use [number] labour-only subbies. For each: how long they have worked for me, whether they work for anyone else, whose hours and tools they use, who supplies the materials, and how I pay them [details]. Tell me which arrangements look like employment, what the exposure might be, and how to restructure them or move them onto the payroll.
More for construction and building in the UK
- Setting a day rate that still pays after holidays, rain days and the vanWork out what an hour of labour really costs you, then price for the margin you want, not a markup that looks like it.Read the lesson
- Busy on three jobs and still short for Friday's wagesWhy builders run out of cash while making a profit, and the weekly forecast, applications and retention ledger that close the gap.Read the lesson
- Quoting the wrong VAT rate on a building job and paying it out of my marginAs of Oct 2026, building work can be 0%, 5% or 20% VAT depending on what is being built, and the rate has to be settled before you quote.Read the lesson
- Starting a job before building control, party wall notices and the phase plan are sortedNo general licence is needed to trade as a builder in the UK, but building control, party walls, CDM and asbestos all have to be dealt with before the first day on site.Read the lesson
- Homeowner or main contractor: the paperwork that decides whether I get paidA homeowner job runs on consumer law and a job for a business runs on the Construction Act, so the paperwork you need and the clauses to strike are different.Read the lesson
- Proving to homeowners, main contractors and councils that I am a safe pair of handsEach kind of client checks different proof: reviews and trust marks for homeowners, accreditation for main contractors, registration for public tenders.Read the lesson
- The main contractor has knocked thousands off my application without a proper noticeOn a construction contract a deduction needs a valid pay less notice served in time. Without one, the notified sum is due in full, and you have suspension, interest and adjudication behind you.Read the lesson
Open the interactive lesson · Every construction and building lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- Uber v Aslam [2021] UKSC 5; Autoclenz [2011] UKSC 41; Ready Mixed Concrete [1968] 2 QB 497 (People: staff, subbies and apprentices)
- What the tool can and cannot do (People: staff, subbies and apprentices)
- ITEPA 2003 Part 2 Chapters 8 and 10 (People: staff, subbies and apprentices)
- www.legislation.gov.uk (People: staff, subbies and apprentices)
- Commencement regulations and the government roadmap (People: staff, subbies and apprentices)
- Apprenticeship funding guidance: Overview; "Apprenticeship hiring payment for non-levy employers" (People: staff, subbies and apprentices)
- Sch 7A Group 7 (Hard cases: tax, people and site)
- Limited companies (Hard cases: tax, people and site)
- Notice 700/45 (Hard cases: tax, people and site)
- reg 5 (Hard cases: tax, people and site)
- reg 4(1)(a) (Hard cases: tax, people and site)
- FFI (Hard cases: tax, people and site)
- regs 2 and 12; Sch 7 para 2 (Pitfalls that embarrass the product)
- s.106(1)(a) (Pitfalls that embarrass the product)
- s.61 (Pitfalls that embarrass the product)
- Commencement and the Central Digital Platform (Pitfalls that embarrass the product)
- Autoclenz v Belcher [2011] UKSC 41; Ready Mixed Concrete [1968] 2 QB 497 (Pitfalls that embarrass the product)
- [2018] EWCA Civ 2448 (Pitfalls that embarrass the product)
- www.legislation.gov.uk (CITB levy, vans, allowances and records)
- CITB current rates page; Levy Order 2026 exemption and reduction articles (CITB levy, vans, allowances and records)
- CITB 'What you pay and why' (CITB levy, vans, allowances and records)
- EIM23150; capital allowances from 1 and 6 April 2025 (CITB levy, vans, allowances and records)
- Company records 6 years; gov.uk self-employed records 5 years (CITB levy, vans, allowances and records)
- TCGA 1992 s.236H onwards; CG67800 (Size, growth and exit)
- s.135 (Size, growth and exit)