Build Up Costs (Labour) Flashcards
In a bill of quantities what rates will be built up and accounted for?
Labour
Materials
Plant
Overheads/Profit/Preliminaries
What do Labour cost consist of?
costs of labourers and tradesman producing work
now include National Insurance, holiday and training scheme payments
Now known as “All in labour rate”.
Rules of Labour costs
MC has to pay out weekly to tradesman
Can’t be postponed or put on credit basis
Can include only labour costs
Concerns about labour costs
Issues becoming v complex
government trying to clamp down on tax avoidance ad trying to fill this loop hole
Why are the government concerned with labour costs?
if the workers are not employed by MC then they are self employed and required to declare their own pay and pay their taxes
Proves difficult and loss of revenue as tradesman try tax evasion
If employed improves government statistics
Issues with employment status and what it is important to do?
Whether the worker is employed or self employed?
Look at the nature of works
Must clarify for tax purposes…
Examples of workers?
agency and people on zero hour contracts…
To be employed as a worker requirements?
- they have a contract- does not to be written
- their reward is for money or some sort of benefit
- they have to come work if they don’t want to
- must have work to do whilst in contract
- their not doing work for their own limited company
- they have a limited right to pass on the works
workers rights?
- national minimum wage
- protection against unlawful deduction of wages
- statutory holiday pay (minimum)
- statutory rest breaks
- not work more than 48 hours per week
- protection against discrimination
- protection from whistle blowing
- part time workers treated equally
additional workers rights?
- statutory sick pay
- statutory paternity pay
- statutory maternal leave
- statutory adoption pay
- shared paternal pay
Workers are not entitled to?
- minimum notice of termination
- protection against unfair dismissal
- the right to request flexible working
- time off for emergencies
- statutory redundancy pay
Likely to be a worker if?
- they do work for a specific business
- The business doesn’t have to offer them work
and they don’t have to accept it-they only work
when they want to…
-Their contract with the business uses terms like
“casual”, “freelance”, “zero hours”, “as required”
or something similar
-They had to agree with the business’s terms and
conditions to get work - either verbally or in
writing
- under supervision
- must do the work assigned
- National insurance and tax deducted
- business provides tools materials etc
likely to be employed as an employee?
- they’re required to work regularly unless they’re
on leave, for example holiday, sick leave or
maternity leave - they’re required to do a minimum number of
hours and expect to be paid for time worked - a manager or supervisor is responsible for their
workload, saying when a piece of work should be
finished and how it should be done - they can’t send someone else to do their work
- the business deducts tax and National Insurance
contributions from their wages - they get paid holiday
• they’re entitled to contractual or Statutory Sick
Pay, and maternity or paternity pay
- they can join the business’s pension scheme
- the business’s disciplinary and grievance
procedures apply to them - they work at the business’s premises or at an
address specified by the business - their contract sets out redundancy procedures
- the business provides the materials, tools and
equipment for their work - they only work for the business or if they do have
another job, it’s completely different from their
work for the business - their contract, statement of terms and conditions
or offer letter (which can be described as an
‘employment contract’) uses terms like
‘employer’ and ‘employee’
employee’s rights that workers don’t get?
- they have everything a worker gets and..
- minimum notice periods if their employment will be ending, for example if an employer is dismissing them - protection against unfair dismissal - the right to request flexible working - time off for emergencies - Statutory Redundancy Pay
What makes you self employed?
- take responsibility for own works success or failure
- not entitled to employment rights and not paid via pay-e scheme
- can be employed and self employed
self employed rights?
- they still have protection for their health and
safety and, in some cases, protection against
discrimination - their rights and responsibilities are set out by the
terms of the contract they have with their client
how to check if their self employed?
- tax law - whether they’re exempt from PAYE
- employment law - whether they have an
employee’s rights
exemption from PAYE?
- they’re in business for themselves, are
responsible for the success or failure of their
business and can make a loss or a profit - they can decide what work they do and when,
where or how to do it - they can hire someone else to do the work
-they’re responsible for fixing any unsatisfactory
work in their own time
- their employer agrees a fixed price for their work
it doesn’t depend on how long the job takes to
finish - they use their own money to buy business
assets, cover running costs, and provide tools
and equipment for their work - they can work for more than one client
not entitled to employment rights if?
- they put in bids or give quotes to get work
- they’re not under direct supervision when
working - they submit invoices for the work they’ve done
- they’re responsible for paying their own National
Insurance and tax
they don’t get holiday or sick pay when they’re
not working
they operate under a contract (sometimes known
as a ‘contract for services’ or ‘consultancy
agreement’) that uses terms like ‘self-employed’,
‘consultant’ or an ‘independent contractor’
The purpose of Construction Industry Scheme (CIS)?
- deduct money from subbie and self employed as contribution towards National Insurance and tax
- contractors must register for scheme
- subbies don’t have to but deductions will be taken at a higher rate 30% rather than 20%
registering as a contractor or subcontractor?
contractor:
- you pay subcontractors for construction work
- your business doesn’t do construction work but
you spend an average of more than £1 million a
year on construction in any 3-year period
subcontractor: if you do construction work for a contractor.
• You must register as both if you fall under both
categories.
what work is covered by CIS?
CIS covers most construction work to:
- a permanent or temporary building or structure
- civil engineering work like roads and bridges
• For the purpose of CIS, construction work
includes:
- preparing the site, eg laying foundations and
providing access works
- demolition and dismantling
- building work
- alterations, repairs and decorating
- installing systems for heating, lighting, power,
water and ventilation
- cleaning the inside of buildings after construction
work
exceptions from signing up to CIS?
You don’t have to register if you only do certain
jobs, including:
- architecture and surveying
- scaffolding hire (with no labour)
- carpet fitting
- making materials used in construction including
plant and machinery
- delivering materials
- work on construction sites that’s clearly not
construction, eg running a canteen or site
facilities
CIS deduction rules?
Under CIS, a contractor must deduct 20% from
your payments and pass it to HM Revenue and
Customs (HMRC).
• These deductions count as advance payments
towards your tax and National Insurance bill.
• If you don’t register for the scheme, contractors
must deduct 30% from your payments instead.
• If you don’t want deductions to be made in
advance by contractors, you can apply for
‘gross payment status’.
CIS deductions should only be made on the
labour element of a subcontractors invoice
• Contractors won’t make a deduction from
amounts you charge on your invoice for:
- VAT
- materials
- equipment which is now unusable (‘consumable
stores’)
- plant hired for the job
- manufacturing or prefabricating materials
claiming back CIS deductions?
• CIS deductions are claimed back at the end of
the tax year via your self assessment tax return
claiming back CIS deductions for limited company?
- CIS deductions must be claimed back through
the company’s monthly payroll scheme and
NOT through the corporation tax return
