Employment Costs
An employee only workforce is around 40% more expensive than a mixture of both employed and self-employed sub-contractors.
The costs include holiday pay, pension contributions plus the costly administration of PAYE and the full range of employee rights.
A fixed workforce is less productive, and removes your ability to match your workforce to your orderbook.
What happens if sub-contractors are reclassified?
If, as the result of either an HMRC Status Inspection or as a consequence of an Employment Tribunal claim you are forced to reclassify your self-employed sub-contractors as employees, you face a number of massive challenges to your business.
The Potential Effects
If your current terms of engagement have been successfully challenged by HMRC, you face:
- Bills for unpaid Employers National Insurance contributions, plus penalties and interest on the unpaid taxes.
- HMRC can also levy fines of up to £3,000 per monthly CIS return, because you incorrectly ticked the self-employed status declaration when your sub-contractors should have been employed.
- Even if you could negotiate payment terms with HMRC, how can you persuade well established sub-contractors to take an inevitable cut in pay or prevent them from lodging employment tribunal claims for unpaid holiday pay, pension contributions, and unlawful dismissal?
- The cost to a business for the future engagement of tradesmen as full-blown employees is at least an additional 40% on top of your current payroll burden.
Other Benefits
Other benefits of appointing EEBS to engage with sub-contractors on your behalf include protecting your business from Employment Rights claims, i.e. holiday pay, pension contributions, unfair dismissal, discrimination and parental rights plus a massive reduction to your CIS administration.
You simply verify us with HMRC, and replace the sub-contractors that you previously reported on your CIS300 with EEBS.
EEBS also offers an additional and convenient CIS Tax Return Service to sub-contractors for £99 plus VAT, and Public liability insurance options.
Employment v Self-employment
| Employee | PAYE |
|---|---|
| Basic pay | £40,000.00 |
| Employer NI | NI £4,360.15 |
| Holiday pay | £4,000.00 |
| Pension | £2,000.00 |
| Cost to YOU | £50,360.15 |
| Net pay to employee | £29,536.00 |
| CIS Self-employed | Sub-contractor |
|---|---|
| EEBS charges | £624.00 |
| Cost to YOU | £40,624.00 |
| Net pay to subbie after deductions* | £32,802.64 |
*includes estimate for expenses
“We are confident that we can rely on EEBS to keep us up to date with any changes and ensure we continue to comply.”
Christine Shearing, Kenwood Groundworks
“We have used EEBS for 7 years now and we cannot fault their service. They keep us up to date with new legislation and regularly carry out compliance reviews. Their staff are friendly and knowledgeable and the processing rates are fair.”
Google Review
“Superb service from EEBS. They handle all our HMRC verification, CIS tax is always calculated correctly, and wages are always paid on time. Couldn’t recommend them highly enough.”
J&J Windows & Doors
