Paying Sub-Contractors

by Steve on July 8, 2009

A return to CIS

The UK Building Industry has always used Sub-Contract Labour as a convenient method of employment which suits both Employers and Employees.

However the Government’s clampdown on bogus Self Employment in recent years has forced many companies to change over to PAYE ,which has proved more costly and put a strain on those companies finances in the current difficult economic climate.

The Building Industry still has a need for Sub-Contract Labour and many companies would benefit greatly from being able to reduce overheads by persuading operatives to become Self Employed.

Question- Is there a way of legally achieving this?

Answer- Yes there is.

By paying Self Employed Sub-Contractors using a Payroll Services Provider a company can be fully compliant with UK tax laws and also benefit by reducing its admin and workforce expenses, such as NI, Holiday & Sick Pay.

Workers could also benefit by being Self Employed in these ways:

Paying LESS tax,

Paying LESS national insurance

Take home MORE of their gross pay


I use a Payroll Services Provider called Hudsons to pay my subbies. If you would like more information on how Contractors and Sub-Contractors can benefit from using a Payroll Provider & Epay, then simply contact me using the ‘Contact Steve’ link (top right of this page) including your name, company name and telephone number.

You will then be contacted by Hudsons and sent an information pack.

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{ 4 comments… read them below or add one }

Editor September 27, 2012 at 09:11

Using a payroll services provider (umbrella?) company like Hudsons has made the admin of paying sub contractors a lot easier. I don’t begrudge paying a fee for their services, and the subbies only seem pleased to have the work and are gauranteed payment and a proper wage slip which keeps a record of their pay and deductions.

dennis robbins September 24, 2012 at 17:34

With reference to your comments regarding umbrella companies working on behalf of
Electricians. I have recently completed such work with an umbrella Company Overseeing the agency and I found the work stimulating and work was there for me, all be it for 6 weeks I really don’t mind an umbrella company as I was payed good expenses and money anyone who pays me as such makes me feel that I am being payed what I am worth, the expenses being the deciding factor when traveling as I do to different locations. I live in Cornwall and Wages have been traditionaly low in this area. The Unbrella company made
it possible to do the work I love and to be re-numerated at what I consider a very fair
salary with expenses….Dennis

DAVID WINTHROPE September 24, 2012 at 01:07


Construction workers such as electricians, plumbers, carpenters and other related trades must pay at least 20 pounds per week to umbrella companies simply to get their wages.

An electrician on a PAYE system or self employed basis with an employment agency is referred to an umbrella company by the employment agencencies chosen Umbrella Company in order to get there wages every week, because agencies cannot pay direct under the CIS scheme set out by the Inland Revenue.

Various Umbrella companies charge 15 to 25 pounds per week to do payroll and you are then employed by the Umbrella Company as an employee.

The agency will charge the client for the services of the worker by the hour which could be anything from 10 to 50 pounds per hour depending on their trade or profession they then pay the umbrella company a percentage of the agreed hourly rate with the employee which is considerably lower than the agreed union rate

By the time the employee receives his hard earned wages and 70 hours later after working 7 10 hour days in order to meet the clients demands two companies have relieved the worker of his earnings not to speak of the HMRC

Is it not time these parasite agencies are regulated by law of what percentage they can take from an employee and pay the employee what is rightfully her or his.

David W

admin September 27, 2009 at 09:03

Thanks for this.
I am emailing you my details for more info.

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