Let's face it, there's potentially tougher economic times ahead. But do the proposed changes to National Insurance and Employment Rights mean it’s time to rethink your employee and sub-contractor arrangements?
This January isn’t just the start of a new year—it’s the start of a new economic cycle. Sure, that could mean new opportunities, but rising taxes, employment costs, and economic uncertainty will challenge construction businesses to stay lean and adaptable.
The Government’s push for “secure, well-paid employment” all comes with harsh penalties for non-compliance. But for many SMEs, these demands are commercially unsustainable.
The contractors that thrive will have flexibility bedded in, so it's no surprise the scales are tipping towards a self-employed workforce.
Here are 5 key issues driving this shift in 2025:
- 💸 National Insurance Increases– Are your project margins at risk from the National Insurance rise in April? (£1,000–£2,000 per employee). From April, employers’ N.I. rises from 13.8% to 15%, with the threshold dropping to £5,000. This makes the cost of employing staff heavier than ever. You can readour Q&A here.
- 👷🏽 Worker Status Changes– Only two categories will remain: employees and the genuinely self-employed. Could your current arrangements pass HMRC’s tests? Thinking of transitioning to a self-employed workforce?Our recent blogmight help.
- 🥸 HMRC’s Increased Compliance Focus– With thousands of new staff in place, construction businesses are firmly in their sights. Are you prepared?
- 🪪 Employment Rights from Day 1– New hires will get statutory rights from the start, and statutory sick pay will apply immediately. This means extra costs and admin for employers.
- 🔄 Domestic Reverse Charge VAT– This VAT scheme could benefit contractors by letting you account for (but not pay) VAT on subcontractor services—if your supply chain meets the criteria. Find outmore here. The message is clear: employee costs are rising, while the benefits of a self-employed workforce are growing. But getting it wrong could lead to fines, backdated tax, and damage to your reputation.
AtEEBS, we’ve spent over 23 years helping businesses like yours. With a proven track record of compliance—over 50 HMRC inspections, never challenged—we provide secure solutions for a flexible, self-employed workforce.
Could you save costs, protect your profits, and stay compliant in 2025? Let’s have a chat...
You canWhatsappus with the word SUPPORTto get the conversation started, call us on01245 493832or fill in your details here and we'll get back to you asap.
All the best, Nick Pilgrim MD, EEBS
