If you’re considering joining the ranks of the construction industry’s self-employed, you’re in good company. Recent estimates place the number of self-employed in construction and building roles at around 167,000 people—approximately half of the industry’s labour force.
So why do so many choose this route? QuickBooks Self-Employed takes you through some of the key challenges of finding work with in the construction industry.
For starters, there are a number of challenges facing the construction industry as a whole. When she was Under-Secretary of State for the Environment, Transport, and the Regions, Beverley Hughes had this to say regarding the construction industry:
“At the outset I make it clear that the construction industry deals with a complex set of circumstances, all of which impact on working conditions. The excessive number of hours worked and some of the other employment issues … [must be discussed] in the context of the industry’s poor record on all areas of employment, including training, health and safety site conditions.”
1. Finding work
The Economy Committee’s 2013 study reveals an apparent paradox in our country: while the UK suffers from a lack of skilled labourers, nearly 150,000 skilled construction workers remain unemployed.
While this apparent contradiction is influenced by many different factors, the fact remains that, in certain parts of the UK, up to 15% of construction workers have difficulty finding work. According to polled labourers, these difficulties are caused primarily by:
What can you do?
While you can’t influence the budget of your clients, you can try to ensure that you’re always up to the task at hand. Referrals are the lifeblood of a sole contractor’s business, so don’t accept jobs that you don’t have the necessary skills to accomplish.
You may also want to be flexible on how much you charge for your services, at least until you’ve built a reputation for yourself. When Ian Tonkinson began a building company with a partner, for example, he discovered that while it wasn’t initially lucrative, at least he was always busy.
And, finally, advertise! Don’t count on customers coming to you; endeavour to sell yourself. Promote yourself online and scour sites like Jobsite for available work. We’ve also published an article aimed at helping the self-employed find work, which you can find here.
2. Skills shortage
The Economy Committee’s 2013 study mentioned above found that while many construction workers struggle to find regular work, places like London suffer from a significant shortage of labourers with specific skill sets, including:
- building envelope specialists
The reason behind this skill shortage is a lack of additional training or apprenticeship programs offered by most firms. Additionally, the CITB says that the construction industry is facing a skills “time-bomb” if new blood isn’t recruited, because 400,000 workers are due to retire within the next decade.
What does this mean for you?
In a word: opportunity! The most recent surveys suggest that demand for construction subcontractors is exploding, with a 14% increase in average advertised salary and a 28% increase in number of job vacancies since 2014.
If you invest in the development of one or more of specialised skills, you’ll more easily find your niche within a market that is currently desperate for skilled labourers.
3. False self-employment status
Unfortunately, one of the greatest challenges facing freelance construction workers right now is simply figuring out if you are actually self-employed. As if you don’t have enough on your plate.
Essentially, false self-employment is a tax evasion scheme used by many employers (sometimes unwittingly) to redefine employees as subcontractors. This deprives workers of previous benefits such as paid sick leave, holiday pay, overtime rates, redundancy pay, travel allowances, pension contributions, and employment protections, but means that they are still beholden to a single employer—in other words, they are not truly freelancing.
For more information on false self-employment, visit the construction worker’s trade union, UCATT.
How do you determine if you’re self-employed?
First, you must understand that you do not get to decide whether or not you are self-employed. There are certain criteria that you must meet, so signing a piece of paper that declares you a subcontractor does not magically make it so.
The best thing you can do is to understand your rights and fully appreciate what self-employment entails. You should know that self employed individuals:
- Must register with HMRC and file their own income tax and NICs.
- Do not owe employer NICs.
- Pay lower rate NICs.
- Claim more generous tax and NIC free expenses than employees.
- Do not receive PAYE from a contractor.
- Can file for penalties if mistreated by an employer
In exchange for these benefits, you lose job security such as sick leave, pension, and redundancy pay.
If you believe that you have been falsely categorised as a self-employed subcontractor, or if you’re not sure whether you are an employee or freelancer, check out the government’s details on Employment Status and the Employment Status Indicator. If you have been wrongly classified, contact your regional office.
As a freelance construction worker, you have enough to worry about without the headache of balancing the books at the end of the day. Visit QuickBooks Self-Employed for accounting software without the hassle, and even more expert tips.