Latest self-employed tax figures suggest construction sector is rebounding strongly

Rebate amounts for CIS-registered workers in the 2021/22 tax year, initial data indicates that rebates amounts are on average 17% higher than pre pandemic levels, according to specialist construction accountancy firm, Brian Alfred.

New data linked to the tax bills of selfemployed construction workers suggests the sector is on track to return to prepandemic levels of activity.

Tax rebate firm Brian Alfred, which specialises in looking after workers who are Construction Industry Scheme (CIS) registered, has revealed that initial figures indicate self-employed construction rebates are around 17 per cent higher than pre-pandemic, with their average client looking set to receive a tax rebate of more than £1,600 from the current tax year.

That’s an increase from an average rebate of £1,370 in 2021 – partly due to reduced incomes because of COVID working restrictions, and the added complexities of the government’s Self- Employment Income Support Scheme (SEISS), which was deemed as taxable income by HMRC.

The data also highlighted how more than 90 per cent of Brian Alfred clients look set for rebates so far, which is a significant increase on 2021 when just 69 per cent of workers were due rebates.

Insights found that for the 2018/19 and 2019/20 tax years – before COVID working restrictions and support schemes were introduced – the average rebate amount was £1,590 for those eligible for one.

The majority of self-employed construction workers in the UK are CIS registered, which means deductions of 20 per cent to their earnings are made at source. This money is then passed onto HMRC to count as payment towards tax and National Insurance contributions.

These workers must then submit an annual self-assessment declaring all earnings and expenses, and this often results in a tax rebate being paid back to them.

Stephen Chapman, Senior Tax Manager at accountancy firm, Brian Alfred, said: “We’re optimistic about the figures we’ve seen so far in relation to the rebate positions of the CIS-registered workers we support.

“We’ve already processed hundreds of selfassessment forms and the data shows a clear increase from the average figures from the 2020/21 tax year, when we really saw the impact of COVID on the construction sector and self-employed workers within it. This suggests that the sector is returning to the kind of levels of activity we saw before COVID arrived. We will continue to monitor these figures as the year progresses but it’s encouraging to see the numbers so far, and we hope the trend continues.”

Although some workers did receive a rebate in the 2020/21 financial year, there were others who received nothing at all, and in some cases owed money to HMRC due to the impact of the government SEISS grants.

Any money claimed through the various SEISS grants were classed as taxable income by HMRC, which saw many of those who typically expect a tax rebate at the end of the financial year instead faced with a surprise tax bill.

Stephen added: “Those that received a SEISS grant in the 2020/2021 tax year will have seen the erosion of rebates – or a tax bill that would not normally be expected. This was compounded by the fact that expenses were likely to be much lower due to less work taking place throughout lockdowns.

“We encouraged our construction workers to prepare their SATR well in advance to understand what they might owe to HMRC, with the impact of SEISS being relatively unknown for many. However, there were still many who left their self-assessment submission until the last minute. Many of these people had no idea that they would owe money to HMRC, and therefore weren’t prepared for potential bills.

“Thankfully, we’re seeing a return to more normal rebate amounts this year, and this is positive for self-employed construction workers, many of whom rely on their annual rebate to fund other things.

“However, our advice is still for people to get their returns in early to understand what kind of rebate they might be due, and also to ensure they work with specialist accountants to maximise what they can legitimately claim back and stay on the right side of HMRC and the law.”

For more information about Brian Alfred and the CIS, visit www.brianalfred.co.uk